Tribunal Issues Decision on the Application for the Revision of the Award in Víctor Pey Casado and Presidente Allende Foundation v. Republic of Chile

Introduction

This is the first revision proceeding carried out completely in ICSID’s history.

Article 51(1) of the ICSID Convention establishes that the investor or the State can request a revision of the award based on a discovery of some fact of such a nature as decisively to affect the award, if when the award was rendered that fact was unknown to the Tribunal and to the applicant, and the latter’s ignorance of it was not due to negligence.

Background

In 1997, former publisher Victor Pey Casado and Fundación Presidente Allende filed for ICSID arbitration against Chile under the Spain - Chile Bilateral Investment Treaty, as a result of the expropriation of their two newspaper companies by the military government of Augusto Pinochet in 1973.

Claimants claimed violations of fair and equitable treatment, protection of investments, and expropriation alleging damages for an amount of US$ 515 million.

The Tribunal held that the expropriation claim granted by the 1994 BIT could not apply retroactively since the act occurred in 1973.  However, it concluded that Claimants were treated unfairly and inequitably, and were denied justice under the BIT since contrary to the expropriation claim the facts for the other two claims extended for a period of time after the effective date of the BIT. Consequently, the Tribunal ordered Chile the payment of US$ 10 million for damages.

On June 2008, the Claimants filed an application for revision of the award based on the knowledge of a press release by Chile’s Defense Council on February 2008, which explained the settlement of a dispute related to the expropriation of another newspaper (Horizonte) in the 70s that was declared null and void by the Supreme Court.

According to Claimants their revision claim was based on this “new fact”, which was the recognition by Chile’s Defense Council that the Chilean Supreme Court had adopted a continuous position of considering null the expropriation decrees adopted in the 70’s during Pinochet’s government. Claimants argued that this new fact was unknown to them and the Tribunal at the time the award was rendered.

Chile established that Claimants did not comply with any of the requisites established in Article 51 in order to request a revision.  According to Chile, the characterization in a press release of a Court judgment was not a fact as the one mentioned in Article 51, since it was not a new fact and Claimants had the burden of proving their unawareness of that press release and their non negligence by not knowing about it.  Also, Chile argued that Claimant had not proved that the press release had a decisive effect over the award.  

Analysis of the Tribunal

The Tribunal pointed out the requirement of fulfilling each of the requisites established in Article 51 for a revision application to proceed since the non compliance of one of them would imply the complete rejection of the application.

The Tribunal did not consider relevant to analyze if the presumed “new fact” was based on a press article, press release, or recognition of a particular jurisprudence of the Chilean Supreme Court since the issue under the revision proceeding is related to a fact in general and pursuant to the requirements of Article 51.  According to the Tribunal the difficulty for Claimants was to prove that the fact was not known by the Tribunal and the applicant, without negligence by the applicant, and that such fact would have decisively influenced in the award.  

The Tribunal based on a series of press articles from newspapers showed by Chile, concluded that Claimants did not prove the existence and discovery of a “new fact” which Claimants would have been unaware without incurring in negligence. The Tribunal considered unlikely that Claimants could have been unaware about the reported settlement between Chile’s Defense Council and the newspaper Horizonte.

Also, the Tribunal established that it could not conclude that the declaration of Chile’s Defense Council could imply a general obligation for the Chilean State, or that it could generate any contradiction with the argument defended by Chile in the arbitration proceeding. The Tribunal indicated that if the jurisprudence invoked by Claimants would have been really reiterated, then both parties and the Tribunal would have known about it. 

Also, the Tribunal pointed out that under Chilean law, in the absence of a norm recognizing the binding character of Chilean jurisprudence, a reiterated jurisprudence did not achieve a binding character.  Thus, the Tribunal held that under the scenario that the fact alleged by the parties was new, it did not offer any certainty or guarantee to the parties either regarding the nullity of the seizure decrees or the indemnification of damages as a result of the seizures.

Decision

On November 18, 2009, the Tribunal rendered a Decision concluding that Claimants did not fulfill all the requisites established in Article 51(1) of the ICSID Convention for a revision application to proceed and rejected it.

In this revision preceding the Tribunal carried out an adequate analysis to establish if a revision claim could exist.  This case illustrates how a claim for revision of an award requires an exhaustive compliance of the following elements: (a) the discovery of a new fact; (b) the fact has to be of such a decisive nature as to affect the award; (c) the fact has to be unknown by the Tribunal and the applicant when the award is rendered; and (d) the applicant’s ignorance of such fact is not due to negligence.

The Tribunal was constituted by Pierre Lalive (Swiss) as President, Mohammed Chemloul (Algerian), and Emmanuel Gaillard (French).

On July 6, 2009, Chile filed a request for annulment of the award rendered on May 8, 2008. This annulment proceeding is currently pending.