On August 4, 2011, an arbitral tribunal at the International Centre for Settlement of Investment Disputes (“the ICSID”) set new precedent for the arbitration world. In Abaclat (and others) v. The Argentine Republic, the Tribunal held that it had jurisdiction to hear claims brought by some 60,000 Italian nationals against the Republic of Argentina following Argentina’s default and later partial restructuring of its sovereign debt. This decision is unprecedented in at least two respects. It is the first decision to hold that an arbitral tribunal has the legal authority to hear claims that a sovereign’s default and debt restructuring may have breached a bilateral investment treaty (“BIT”). Second, Abaclat is the first arbitral decision to hold that 60,000 Claimants may join in one mass claims arbitration under the institutional rules of the ICSID. If the Abaclat decision is followed in the future, it will likely have significant impact on sovereign debt restructuring, the drafting of arbitration clauses, and the scope of ICSID jurisdiction over mass claims arbitrations.
This commentary begins with a brief sketch of the circumstances leading to the Abaclat arbitration and then discusses the claims at issue in the most recent stage of the arbitration, the jurisdictional phase. The third section discusses the Abaclat tribunal’s (“The Tribunal”) rulings on the jurisdictional issues. Finally, the fourth section discusses the potential impact of the case.