Requests for reconsideration in ICSID and UNCITRAL arbitrations
Global | Publication | June 2017
Is your international arbitration award really final and binding?
Generally, parties to international arbitrations assume that decisions are final and binding and that tribunals will not (or indeed, cannot) revisit decisions once made. However, circumstances may arise, such as where new evidence is discovered, that prompt parties to call for a tribunal to reconsider its prior determinations, having regard to the appropriate balance between finality and flexibility. We consider the validity of requests for reconsideration under the ICSID Rules and the UNCITRAL Rules and analyze examples of the approaches taken by tribunals formed under those rules.
The ICSID Rules of Procedure for Arbitration Proceedings (ICSID Rules) and the ICSID Convention, provide for several remedies – albeit limited in scope and application – where a party considers a final award to be unsatisfactory in some respect. A party can apply for interpretation of an award where it considers it to be unclear. If a party later discovers some fact that was not known to the applicant party or the tribunal at the time the award was rendered, despite due diligence, and the fact would have “decisively” affected the award, the party can apply to have an award changed through a process known as revision. A party also has the right to apply for annulment of an award on procedural grounds.
However, neither the ICSID Rules nor the ICSID Convention specifically address whether a tribunal has the power to reconsider its own decisions made in the course of an arbitration. Absent a specific provision, a tribunal’s power to reconsider a decision would seemingly be founded in its inherent jurisdiction to control its own process. This question is controversial. Whether a tribunal constituted pursuant to the ICSID Rules may reconsider otherwise final decisions has been the subject of two significant new decisions in the past two years.
Perenco v Ecuador, ICSID Case No. ARB/08/6, Decision on Ecuador’s Reconsideration Motion, April 10, 2015 (Perenco)
In Perenco, Ecuador gave notice it intended to submit a motion for reconsideration of a Decision on Remaining Issues of Jurisdiction and on Liability by the tribunal. The tribunal permitted the motion to proceed, but emphasized “that only in exceptional circumstances would it be open for the Tribunal to reconsider its prior reasoned decisions” and directed Ecuador “to focus its Motion on the existence of those exceptional circumstances which would justify the reconsideration of the Tribunal’s Decision.”. The tribunal’s directions were notable because they appeared to accept that a tribunal would have jurisdiction to reconsider its own decisions, in at least some circumstances. This point of jurisdiction had been something commentators and other tribunals had previously cast doubt over.
Ecuador argued that the tribunal had repeatedly omitted to determine issues put to it, violating fundamental rules of procedure, manifestly exceeding its powers and failing to state the reasons on which the decision at issue was based. Ecuador argued that these errors would be grounds for annulment, but that in any event, a lower standard of review applied pre-award.
The tribunal found that in the circumstances of the case, it was not open to it to reconsider its prior decision. It held that a decision that contains no errors making it subject to annulment should stand. Furthermore, it would generally be undesirable (and not in accordance with the scheme of the ICSID Convention) for an arbitral panel to simultaneously act as a tribunal and an annulment committee. Accordingly, a basis for a tribunal power to reopen, amend or reverse its decisions could not be inferred from the existence of an annulment procedure. The tribunal also emphasized that the power to revise an award only existed in one very specific instance – where new evidence is discovered. As a result, the tribunal concluded that once a tribunal decides with finality any of the factual or legal questions put to it by the parties, such a decision becomes res judicata.
Standard Chartered Bank (Hong Kong) Limited v Tanzania Electric Supply Company Limited (Tanesco), ICSID Case No. ARB/10/20, Award, September 12, 2016 (Standard Chartered)
In Standard Chartered, the claimant presented a request for reconsideration to the tribunal following the receipt of new information. The tribunal found that it did have jurisdiction to reconsider a prior decision concerning jurisdiction. The tribunal opined that it is incorrect to characterize decisions of ICSID tribunals – as opposed to their awards – as res judicata. The circumstances of that case, however, were unique. The tribunal concluded that not only had new evidence come to light but that information provided to the tribunal by the respondent had been misleading. It remains to be seen whether other panels will extend the Standard Chartered panel’s reasoning to cases where new evidence is discovered but no misleading testimony or evidence has been given to the panel.
Like the ICSID Rules, the UNCITRAL Arbitration Rules (UNCITRAL Rules) provide a number of safeguards against awards that are ambiguous, contain typographical or other unintentional errors, or are incomplete. However, none of these mechanisms offer a means for reviewing or challenging a tribunal’s reasoning, the substance of an award or the adequacy of the evidence upon which the award was based. The UNCITRAL Rules do not provide for an annulment procedure. If a party believes that an award ought to be set aside for a lack of jurisdiction on the part of the tribunal or procedural unfairness, then that party must apply for relief from a court where the arbitration was seated.
Possibly for these reasons, requests for reconsideration under UNCITRAL Rules arise in the context of final awards, as well as orders and decisions.
The UNCITRAL Rules provide that an award is “final and binding”, and grant no explicit authority to a panel to reconsider its award, or for that matter, any final decision (tribunals do have express authority under Article 26 to modify, suspend or terminate interim measures).
The general consensus at present is that tribunals composed under the UNCITRAL Rules lack a general power to reconsider final awards. However, like tribunals formed under ICSID Rules, it is possible that they may have a limited power to reconsider awards and decisions which are the product of false testimony or fraud, on the basis of a tribunal’s inherent powers.
This possibility was recognized in Biloune v Ghana, a 1989 arbitration where the tribunal stated that it “would not hesitate to reconsider and modify its earlier award were it shown by credible evidence that it had been the victim of fraud,” but concluded that no such evidence had been produced.
More recently in 2005, the NAFTA tribunal in Methanex Corporation v United States of America refused to consider a request for reconsideration of an earlier partial award. It found there was nothing in the UNCITRAL Rules to suggest that a tribunal has jurisdiction to reconsider a final and binding award that it has already made, though it acknowledged a “possible exception for fraud by a party”, though this was not relevant on the facts of this case.
In view of the Standard Chartered panel’s recent affirmative ruling on this point, it is not unreasonable to hypothesise that a tribunal constituted pursuant to the UNCITRAL Rules might follow the Standard Chartered line of reasoning if presented with new evidence that had been deliberately concealed by a party. However, it is to be hoped (and expected) that such occurrences will be rare.