El Cronista

January 25, 2013
By Carlos Arbia

At the summit of the Community of Latin American and Caribbean States (CELAC) and the European Union (EU), which is being held this weekend in Chile, the countries making up the South American block of UNASUR will seek to stop being subject to the decisions of the international arbitration tribunals, like the International Center for the Settlement of Investor Disputes (ICSID) which is a dependency of the World Bank, or other entities, as El Cronista reported on Monday.

The Argentine government will support a proposal from Ecuador at the regional level and which will be debated in this summit that will be attended by President Cristina Fernández de Kirchner, who will probably travel this afternoon or Saturday morning.   Also confirmed is the presence of Economy Minister Hernan Lorenzino.  The intention of the Argentine government to leave ICSID would also be to avoid another battle with the vulture funds.  It is feared that in case these funds don’t get a favorable ruling from the Court of Appeals in New York, they will go to the ICSID to file claims on their bond investments.

According to the view of economist Daniel Marx “it’s not so easy for the so-called vulture funds to go to the ICSID if the ruling against Argentina is negative from February 27.  But it has to be said that Argentina has 3 cases in the ICSID related to the bonds, most of them with Italian bondholders, they are 3 cases at different stages of resolution; if Argentina leaves the ICSID like Venezuela or Bolivia have announced, the countries can come and go but there is no retroactive effect.”  Marx also added that “what was put forth there follows its process, but the Italians could file because there is a treaty between Argentina and Italy, it’s not the same case with the U.S. but one cannot rule out an attempt by them to make another play to collect the US$1.33 billion that they want Argentina to pay.”

On Monday, this newspaper reported that Kirchnerism will also seek this year through a law it will send to Congress to annul 59 bilateral investment treaties that establish the ICSID as the resolution forum for disputes between the Argentine state and multinationals.  This is no small thing, because Argentina currently faces 43 claims in this tribunal, in which the plaintiff companies (the last was filed by Repsol) are demanding indemnities totaling US$65 billion from the country.  And among these 43 cases there are five in which the ICSID already issued final rulings against Argentina, which the country didn’t honor.

Around whether Argentina can leave the ICSID to avoid some bondholders going there, economist Jorge Todesca said he doesn’t think it would be a good thing.  “It’s a very unpredictable tribunal around decisions, in any case in the majority of cases it pushes for negotiations in place of producing sanctions.  I am referring to cases in general, not only from Argentina, the same is done by World Trade Organization with the differences between countries.”

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