1
INTERNATIONAL CENTRE FOR SETTLEMENT OF INVESTMENT DISPUTES
WASHINGTON, D.C.
RSM PRODUCTION CORPORATION
Applicant
- AND -
GRENADA
Respondent
ICSID CASE NO ARB/05/14
(ANNULMENT PROCEEDING)
DECISION ON RSM PRODUCTION CORPORATION’S APPLICATION FOR A PRELIMINARY RULING OF 29 OCTOBER 2009
Members of the ad hoc Committee:
Dr Gavan Griffith QC, President
Dato’ Cecil W M Abraham, Member
Professor Campbell McLachlan QC, Member
Secretary to the ad hoc Committee:
Ms Milanka Kostadinova
Assistant to the ad hoc Committee:
Dr Chester Brown
The Parties’ Legal Representatives:
Representing the Applicant: Representing the Respondent:
Dewey & Leboeuf LLP Freshfields Bruckhaus Deringer LLP
2
A. Introduction
1.
On 26 June 2009, RSM Production Corporation (‘the Applicant’),
submitted a Request for Annulment to the ICSID Secretariat (‘ICSID’)
pursuant to Article 52(1) of the ICSID Convention and Rule 50(1)(iii)
of the ICSID Arbitration Rules, requesting the annulment of the Award
of 13 March 2009 rendered by the Tribunal in the arbitration proceeding
between the Applicant and Grenada (‘the Respondent’). The Request for
Annulment was registered by the ICSID Secretariat on 10 July 2009, and
the ad hoc Annulment Committee (‘the Committee’) was constituted on 17
August 2009.
2. In its Request for Annulment, the Applicant submits
that in rendering the Award, the Tribunal ‘manifestly exceeded its
powers’ (contrary to Article 52(1)(b) of the ICSID Convention); that
there was a ‘serious departure from a fundamental rule of procedure’
(contrary to Article 52(1)(d)); and that the Award ‘failed to state the
reasons on which it is based’ (contrary to Article 52(1)(e)). These
submissions are further particularised in the Applicant’s Request for
Annulment dated 26 June 2009, and in the Applicant’s Memorial in
Support of its Request for Annulment dated 16 November 2009.
3. The
Committee convened a procedural hearing in London on 16 October 2009
(‘the Procedural Hearing’). At the Procedural Hearing, the Applicant
made an application in which it requested the Committee to investigate
suspicions of corruption in the contract underlying the present
dispute. The Committee invited the Applicant to put its application in
writing. The Applicant duly submitted its application by letter dated
29 October 2009 (‘the Application’), with which it enclosed various
exhibits. The Respondent submitted its observations on the Application,
together with various exhibits, by letter dated 16 November 2009 (‘the
Reply’).
3
B. The Application
4. In its Application, the
Applicant offers a summary of the dispute between it and the
Respondent. In that summary, the Applicant essentially sets out the
case that it put before the Tribunal constituted to determine the
merits of this dispute, as detailed in various written submissions and
as elaborated at the substantive hearing which was held at the
International Dispute Resolution Centre, 70 Fleet Street, London EC4Y
1EU, from 18 – 22 June 2007 (‘the Merits Hearing’). It would serve no
practical purpose to restate the Applicant’s case in extensive detail
here. For present purposes, it suffices to say that the Applicant
infers that the Respondent’s denial of the Applicant’s application for
an exploration licence on 27 April 2004, and the Respondent’s
subsequent termination of the Agreement of 4 July 1996 (‘the
Agreement’), as notified by letter dated 5 July 2005, was motivated by
an alleged bribe that was paid, or was to be paid, to Mr Bowen, the
then Attorney-General of Grenada, by a corporate entity called Global
Petroleum Group (‘Global’).
5. At the Merits Hearing, counsel for
the Applicant put it to Mr Bowen that he had accepted a bribe from
Global in relation to an oil exploration contract which Global has
apparently since concluded with the Respondent. The Applicant repeats
this allegation in its Application. At the Merits Hearing, Mr Bowen
denied this allegation,1 but confirmed that Global had provided the
Respondent with US$2.5 million in order to fund the arbitration
proceedings.2
6. At the Merits Hearing, counsel for the Applicant
did not request that the Tribunal make a finding of fact relating to
the alleged corruption. Rather, counsel for the Applicant merely
submitted that the Tribunal should take this evidence into account in
deciding on the credibility of Mr Bowen and his testimony. As counsel
for the Applicant put it:
I have explained the significance, as we
see it, of what has been going on with a negotiation of this secret
agreement, and the – I would venture to suggest the
1 Merits Hearing Transcript, Day 4, 44-45.
2 Ibid 43-44.
4
devastating
admissions that Bowen made in cross-examination yesterday about how
this agreement had come about, and why he kept it quiet, and gauge
this; he told me in answer to questions yesterday afternoon that the
US$2.5 million was received around the time, within a month or so
around the time that the agreement was entered into at the end of
September 1995 [sic], but he couldn’t explain why the following May of
2006 the government received US$1.9 million less US$25 for bank charges
from the Fish Eye Company on account of Global, on account of the
agreement of September, and he said, well, he thought that actually
might be part of the US$2.5 million, an explanation, obviously
inconsistent with the one he had given me only a minute or so before. I
am not asking you, I made it plain in the private sessions we had when
Bowen was out of the room, I am not asking you, and it is no part of
your function, and it is not necessary for you, to find that Mr Bowen
is corrupt, or even to find that he’s incompetent, or that he’s both.
What this has to do with is the credibility, in the sense that I have
explained it.
3
7. On this issue, the Tribunal concluded as follows:
On
all the evidence adduced in these arbitration proceedings, the Tribunal
does not accept any of these personal criticisms of Senator Bowen for
the purposes of its decision in this Award. Moreover, after a firm but
fair cross-examination of Senator Bowen during the Main Hearing, RSM’s
counsel submitted in his closing oral submissions that RSM was not
requesting this Tribunal, in these proceedings, to find Senator Bowen
‘corrupt’ or ‘incompetent’ … Nor does it.4
8. Having set out this
background, the Applicant then explains in its Application what it is
asking of the Committee. First it states that it is not asking the
Committee to review these findings of the Tribunal for error. Rather,
the Applicant explains, it is asking the Committee ‘to exercise its
independent jurisdiction to enquire whether Senator Bowen did in fact
behave corruptly. In other words, we are now explicitly asking the
Committee to do what we specifically said that the Tribunal need not
do’.5
3 Ibid, Day 5, 49-50. The Applicant claims that it does so now
because, two years on from the Merits Hearing, it is ‘better able to
4 Award of 13 March 2009, para 212.
5 Application, 4.
5
marshal and evaluate the evidence, some of which only emerged at the hearing itself’.
6
9.
The Applicant explains that it is not asking the Committee ‘to conduct
a full-bore investigation into corrupt activities at high levels of the
Grenadian government’, as it acknowledges that the Committee ‘plainly
lacks the power to embark upon that kind of venture’.7 The Applicant
submits, however, that the Committee has the authority and the
obligation to make its own enquiries on the basis of prima facie
evidence which it has submitted. In the view of the Applicant, the
Committee possesses an inherent jurisdiction to investigate allegations
of bribery, which it describes as being contrary to ‘accepted norms of
international public policy’ and a ‘universal norm of international
law’.8
10. In support of the proposition that the Committee has an
inherent jurisdiction to investigate such allegations, the Applicant
cites a number of decisions of international arbitral tribunals, namely
the Lehigh Valley Railroad Company Case;9 Dallal v Iran;10 and Morris v
Iran.11 On the basis of these decisions, the Applicant submits that
‘international tribunals have jurisdiction to make enquiries and
decisions beyond the scope of their technical mandate where
circumstances so require’.12
11. In the closing paragraph of the
Application, the Applicant puts into concrete terms the relief that it
seeks. There, the Applicant ‘petitions this Committee to instruct
Grenada to reveal the details of its relationship with Global
Petroleum’, beginning with ‘disclosure of who is paying Freshfields’
fees in the current annulment proceeding’,13
6 Ibid. and the
Applicant submits further that ‘[t]he Committee should thereafter make
whatever further enquiries it deems fit to assure itself that it has
7 Ibid 5.
8 Ibid 5-6.
9 8 UNRIAA 160 (US – Germany Mixed Claims Commission, 1933).
10 5 Ir-USCTR 84 (Iran – US Claims Tribunal, 1984).
11 3 Ir-USCTR 364 (Iran – US Claims Tribunal, 1983).
12 Application, 7.
13 Ibid 8.
6
properly discharged its obligations in accordance with existing and evolving international public policy’.
14
C. The Reply
12.
In its Reply, the Respondent makes a number of submissions in response
to the Application. First, the Respondent submits that the Applicant
had, in the course of the Merits Hearing, waived the right to argue
that Mr Bowen was involved in corrupt activities.15 The Respondent
refers to the ongoing court proceedings in New York, in which the
Applicant has pursued the allegations of corruption which are levelled
at Mr Bowen. The Respondent explains that at an earlier stage of these
arbitration proceedings, it had requested an order that the Applicant
be required to withdraw the case on the basis that the Applicant was
attempting to litigate the same dispute in another forum (namely the
New York courts). The Respondent submits that the Applicant, at the
time, assured the Tribunal that its allegations of corruption formed no
part of its case before the Tribunal. In the Respondent’s submission,
this is consistent with various statements made at the Merits Hearing
by counsel for the Applicant.16 The Respondent further submits that the
Applicant, ‘[h]aving expressly and repeatedly disclaimed the corruption
allegations in the proceedings before the Tribunal … may not seek to
resuscitate them now’.17 In this regard, the Respondent refers to the
Decision of the Annulment Committee in Maritime International Nominees
Establishment v Republic of Guinea, in which the Annulment Committee
stated that ‘the annulment proceeding is not an occasion to present
arguments and submissions which a party failed to make in the
underlying proceedings’.18 The Respondent also refers to the decisions
of other international courts and tribunals as authority for this
proposition.19
14 Ibid.
15 Reply, 3-5.
16 Merits Hearing Transcript, Day 4, 55-56; Merits Hearing Transcript, Day 5, 49-50.
17 Reply, 4.
18
Maritime International Nominees Establishment v Republic of Guinea
(ICSID Case No ARB/84/4), Decision on Annulment of 22 December 1989,
para 6.42.
19 Reply, 4-5.
7
13. Second, the Respondent submits
that, in any event, the Applicant’s allegations have no relevance to
the issues before the Committee.20 The Respondent notes that the
Applicant does not allege that there was corruption on the part of a
member of the Tribunal, and the Respondent observes that the Applicant
does not allege that the procurement, formation or performance of the
Agreement of 4 July 1996 was in any way tainted by corruption. In the
Respondent’s submission, the only respect in which the Applicant
contends that corruption has any relevance to the present case is that
Mr Bowen’s testimony on a particular issue should have been disregarded
due to his credibility being undermined by his alleged willingness to
solicit and accept a bribe. However, in its Award, the Tribunal did not
find it necessary to rely on Mr Bowen’s testimony on that issue, due to
the existence of relevant corroborating documentary evidence.
Furthermore, the Respondent submits that even on the Applicant’s own
case, the allegations of corruption are not relevant to the
‘dispositive issue in the Award’, being the proper construction of the
relevant provision in the Agreement of 4 July 1996.21 And finally on
this point, the Respondent observes that the Application contains only
one concrete request for information, namely whether Global is funding
the Respondent’s costs in the present annulment proceeding. The
Respondent submits that it cannot see how the Government’s ‘payment of
fees “in the current annulment proceeding” could be part of an
investigation into Mr Bowen’s alleged corruption’.22
14. Third, the
Respondent submits that, in any event, the Committee lacks the
jurisdiction to consider the Application.23 The Respondent observes
that the Committee ‘is a creature of the ICSID Convention’, as
established under Article 52 of the ICSID Convention, and that the
grounds for annulment in Article 52 are exhaustive.24 The Respondent
also refers to Article 53(1), which provides that an award ‘shall not
be subject to any appeal or to any other remedy except those provided
for in this Convention’.25
20 Ibid 5-7. The Respondent notes that
the ‘public policy’ invoked by the Applicant cannot serve as a basis
for any remedy that the
21 Ibid 6.
22 Ibid 7.
23 Ibid 8-10.
24 Ibid 8.
25 ICSID Convention, Article 53(1).
8
Committee has the power to grant.
26
Further, the Respondent submits that the cases cited by the Applicant
as a source of the Committee’s ‘inherent jurisdiction’ to grant the
Application provide no assistance to its argument. The Respondent
concludes by submitting that the Application is ‘wholly unsupported by
logic or the ICSID Convention’ and that it should be rejected.27
D. The Committee’s Views
15.
The Application raises an important issue relating to the jurisdiction
of the Committee under the ICSID Convention. The ICSID Convention
establishes a self-contained system of arbitration. This is confirmed
by Article 53 of the ICSID Convention, which provides that an ICSID
award ‘shall not be subject to any appeal or to any other remedy except
those provided for in this Convention.’28
16. The ICSID Convention
and the ICSID Arbitration Rules expressly confer various procedural
powers on Tribunals which are constituted in accordance with the ICSID
Convention in order to determine disputes. With particular regard to
the procedural powers of ICSID Tribunals in the post-award phase, those
powers include the power of rectification,29 the power to issue a
supplementary award,30 the power of interpretation,31 and the power of
revision.32
These powers are to be exercised by the original
Tribunal which determined the merits of the dispute, and can only be
exercised within certain stipulated time periods.
17. In particular,
Article 51 expressly enables either party to apply to the original
Tribunal for the revision of the award ‘on the ground of the discovery
of some fact of such a nature as decisively to affect the award,
provided that when the award
26 Reply, 8-9.
27 Ibid 10.
28
ICISD Convention, Article 53(1). The Convention does not permit the
review of an arbitral award on grounds of public policy. A proposal for
an exception to the obligation to enforce an ICSID award under Article
54 on public policy grounds was rejected by a large majority of states
(25 in favour of rejection; 9 against) negotiating the ICSID
Convention: History vol II, 903.
29 ICSID Convention, Article 49(2).
30 Ibid Article 49(2).
31 Ibid Article 50(1).
32 Ibid Article 51(1).
9
was
rendered that fact was unknown to the Tribunal and to the applicant and
that the applicant’s ignorance of that fact was not due to negligence’.
33
18.
In addition to these post-award powers of the original Tribunal, the
ICSID Convention provides that either party can request the annulment
of an award under Article 52.34 Article 52(1) sets out five grounds on
which a request for annulment may be based. These five grounds are
exhaustive.35 ‘[A]n annulment proceeding is not an appeal, still less a
retrial; it is a form of review on specified and limited grounds which
take as their premise the record before the Tribunal’.36
19. The
Committee observes that the allegations made by the Applicant in the
present Application do not fall within any of the five grounds for
annulment enumerated in Article 52. Indeed, the present Application
cannot properly be characterised as a request for annulment. In this
respect, it is noteworthy that the corruption issue is not raised in
the Request for Annulment dated 26 June 2009. The corruption issue is
only briefly mentioned in the Memorial in Support of the Application
for Annulment dated 16 November 2009, although the Applicant fails to
explain the ground for annulment in Article 52 of the ICSID Convention
on which this argument is based.37
Rather, as noted above, the
Applicant asks the Committee to consider and investigate evidence that
was available before the original Tribunal and additional evidence that
has been led in proceedings commenced by the Applicant before the New
York courts. The Applicant does not point to any specific provision of
the ICSID Convention or the ICSID Arbitration Rules as a basis for the
Committee’s power to grant its Application, but rather seeks to invoke
the Committee’s inherent powers.
20. The Committee agrees with the
Applicant that international courts and tribunals have certain inherent
powers which permit them to exercise powers that may go beyond the
express terms of their constitutive instruments. However, the
33 Cf. ICJ Statute, Article 61.
34 ICSID Convention, Article 52(1).
35
See, e.g., Wena Hotels Ltd v Arab Republic of Egypt (ICSID Case No
ARB/98/4), Decision on Annulment of 5 February 2002, paras 17-18;
Christoph Schreuer et al, The ICSID Convention: A Commentary (2nd ed,
2009), 932.
36 MTD Equity Sdn Bhd v Chile (ICSID Case No ARB/01/7), Decision on Annulment of 21 March 2007, para 31.
37 Memorial in Support of the Application for Annulment, 2.
10
Committee
considers that international courts and tribunals can only exercise
such powers where those powers are necessary to ensure the performance
of functions that have been expressly conferred. Further, there are
limitations on the exercise of inherent powers, including that such
powers cannot be inconsistent with the terms of the relevant
constitutive instrument of the international court or tribunal.
38
21.
The Committee’s function is to determine the Applicant’s Request for
Annulment, which was submitted under Article 52(1) of the ICSID
Convention. It is well established that ad hoc Annulment Committees
have a narrowly defined jurisdictional mandate. The Committee agrees
with the view that the exhaustive nature of the list enumerated in
Article 52(1) means that ‘a party may not present new arguments on fact
and law that it failed to put forward in the original arbitration
proceeding … [n]or should a party present new contemporaneous evidence
….’39
22. As for the jurisprudence relied on by the Applicant in
support of its proposition that the Committee has the power to make
investigations into the alleged bribery, the Committee considers that
these authorities do not assist the Applicant:
• In the Lehigh
Valley Railroad Company Case, the Commission held that it had the power
to reopen cases in relation to which charges were made that the
Commission had been ‘defrauded and misled by perjury, collusion, and
suppression’.40
38 United States – United Kingdom, Court of
Arbitration established under the Air Services Agreement of 23 July
1977 (Heathrow Airport User Charges) (Supplementary Decision, 1
November 1993), 102 ILR 564, 579. However, two features distinguish the
LeHigh Valley Railroad Company Case from the present one. First, the
application in that case was made to the original Commission, which was
not functus officio. If such an application were to be made under the
ICSID Convention, it would properly be made by way of an application to
the original tribunal for revision under Article 51. Second, there has
been no allegation that the Tribunal’s Award in this case was procured
by fraud or affected by corruption; rather, as noted above, the
Applicant maintains that
39 Schreuer, above n 35, 932.
40 8 UNRIAA 160, 190 (US – Germany Mixed Claims Commission, 1933).
11
the alleged corruption was ultimately immaterial to the construction of the relevant provision of the Agreement of 4 July 1996.
41
•
As for the decisions of the Iran – United States Claims Tribunal cited
by the Applicant, neither of these provides any authority for the
proposition on which the Applicant seeks to rely, for in both cases,
the Iran – United States Claims Tribunal did not decide whether it had
an inherent power to review and revise an Award under exceptional
circumstances.
42
23. Although not cited by the Applicant or the
Respondent, there are a number of other arbitral decisions which deal
with the power of international courts and tribunals to reopen a case
for newly discovered evidence. On the basis of the principle of jura
novit curia, the Committee is able to consider the relevance of those
decisions.43
24. One such decision is Ram International Industries,
Inc v Air Force of Iran,44 where the Iran – United States Claims
Tribunal expressed the view that ‘it might possibly be concluded that a
tribunal … which is to adjudicate a large group of cases for a
protracted period of time would by implication, until the adjournment
and dissolution of the tribunal, have the authority to revise decisions
induced by fraud’.45
However, this decision does not assist the
Applicant, for again, the Iran – United States Claims Tribunal
ultimately left the issue open; in any event, the present Committee is
not the same body as that which determined the merits of the dispute.
25.
Another relevant decision is that of the UNCITRAL Tribunal in Biloune
and Marine Drive Complex Ltd v Ghana Investments Centre and the
Government of Ghana.46
41 Application, 3. In that case, the UNCITRAL
Tribunal held that: ‘[A] court or tribunal, including this
international arbitral tribunal, has an inherent power to take
cognizance of credible evidence, timely placed before it, that its
previous
42 Morris v Iran, 3 Ir-USCTR 364, 365 (1983); Dallal v Iran, 5 Ir-USCTR 74, 75 (1984).
43
Fisheries Jurisdiction [1974] ICJ Rep 3, 9; Military and Paramilitary
Activities in and against Nicaragua [1986] ICJ Rep 14, 24-5; Bin Cheng,
General Principles of Law as Applied by International Courts and
Tribunals (first published 1953, 1987 ed), 299.
44 29 Ir-USCTR 383 (1993).
45 Ibid 390.
46 95 ILR 184 (1990).
12
determinations
were the product of false testimony, forged documents, or other
egregious “fraud on the tribunal” …. Certainly if such corruption or
fraud in the evidence would justify an international or a national
court in voiding or refusing to enforce the award, this Tribunal also,
so long as it still has jurisdiction over the dispute, can take
necessary corrective action’.
47 This decision, although providing
stronger support for the proposition advanced by the Applicant, is also
of no assistance to the Applicant in the present case. First, the
Application has not been made to the original Tribunal, but rather to
the Committee. Second, and in any event, the Applicant has not argued
that the Award was the product of false testimony. As stated by the
Tribunal in its Award, and as acknowledged by the Applicant, the
Tribunal did not need to rely on the alleged false testimony of Mr
Bowen, but instead was able to rely on documentary evidence for its
finding on the relevant issue.48
26. The Applicant has specifically stated that it is not asking the Committee to review the Tribunal’s findings for error.49
There
would be no permissible ground for such an application under Article
52. On the basis of the foregoing reasons, the Committee also concludes
that it does not have the power to exercise an independent jurisdiction
to enquire into the matters of which the Applicant makes complaint.
27.
Further, and in any event, the position adopted by the Applicant in the
present Application is inconsistent with that which it expressly took
before the Tribunal. Indeed, the Applicant accepts that it is
‘explicitly asking the Committee to do what we specifically said that
the Tribunal need not do’.50 But this the Committee considers the
Applicant may not do, since international law, as much as any system of
municipal law, will not permit a party to blow hot and cold in respect
of the same matter.51
47 Ibid 222.
48 Award, para 183; Application, 3; Reply, 5-6.
49 Application, 4.
50 Ibid.
51 Cheng above n 43, 141-9.
13
28.
The only ground advanced for this approach by the Applicant is that
‘unlike two years ago, RSM is better able to marshal and evaluate the
evidence.’52 But the evidence to which the Applicant refers was all
obtained by it prior to the delivery of the Award, and, in one case,
prior to the Merits Hearing.53 In the case of the evidence obtained
after the Merits Hearing, if the Applicant had good grounds to submit
that this was new evidence decisively relevant to the issues in the
arbitration, then, even if the Tribunal had closed the proceedings,54
the Applicant could still have applied to the Tribunal to reopen the proceedings under ICSID Arbitration Rule 38(2).
29.
As noted above, the Committee’s function is to consider and determine
the Applicant’s Request for Annulment. The Committee considers that the
issues raised in the Application are not directly relevant to that
Request. As the Applicant itself stated in its Application, it believes
that ‘the language of the contract with Grenada militated in RSM’s
favour; whether or not Senator Bowen acted corruptly was ultimately
immaterial to the construction of that language’.55
Further, the
only specific request made by the Applicant in its Application is
unrelated to the allegation of personal corruption on the part of Mr
Bowen.
30. For these reasons, the Committee decides that the
Application is outside its jurisdiction. The Committee accordingly
rejects the Applicant’s Application in its entirety.
E. Costs
31.
The Respondent has requested the Committee to order that the Applicant
reimburse the Respondent for its costs in defending the Application.
52 Application, 4.
53
Application Exhibit B: Deposition of T Bass is in the ICSID arbitration
and is dated 23 May 2007 (prior to the Merits Hearing in the
arbitration). Application Exhibit C: Declaration of M Rose in the New
York Proceedings is dated 9 November 2007.
54 According to the
Award, the arbitration file was only ‘informally closed’ by the
Tribunal at the end of the Merits Hearing: Award, para 26. The
proceedings were not formally closed under Rule 38(1) until 15 January
2009: ibid, para 37. The Applicant claims in its Request for Annulment
that the proceedings were closed at the end of the Merits Hearing on 22
June 2007: Request for Annulment, para 19.
55 Application, 3.
14
32. The Committee considers it appropriate to reserve issues of costs until the end of the present annulment proceedings.
Done on 7 December 2009.
/Signed/
Gavan Griffith QCPresident of the Committee