I. CMS Gas Transmission Company Vs. Government of Argentina
An arbitral tribunal has ruled against Argentina in an important case arising out of that country’s recent economic crisis. The tribunal held that emergency measures adopted by the Argentine Government violated the country’s obligations under the US-Argentina Bilateral Investment Treaty (BIT). Based on these findings, the tribunal awarded a US investor, CMS an approximately US $ 130 Million in compensation. Of the approximately 34 cases brought before the International Centre for the settlement of Investment Disputes (ICSID) in connection with Argentina’s economic crisis, this is the first to yield a merit award.
The privatization: background to the disputes
Argentine Republic in 1989, jurisdiction was made on economic and public utilities as well as participation of foreign investment. Gas transportation was one of the significant sectors to be included under this reform program. The privatization of TGN, was opened to investors by a means of public tender offer. In the claimant view, the legislation and regulation enacted as well as license, resulted in legal regime under which tariff were to be calculated in dollars conversion to pesos was to be effected at the time of billing and tariffs would be adjusted every six months in accordance with US Procured Price Index. CMS has a total participation of 29.42% of TGN shares which was purchased by government.
The Argentine Crisis
• In the late 1990s, Argentina was plunged into an economic crisis (Point 9).
• The collapse of the Argentine economy was one of the most spectacular in modern history. The issue in this case cannot be understood without an appreciation of the crisis that ravaged Argentina’s economy, society an ...