Contrastación de hipótesis específicas

Three main types of dispute resolution have been commonly adopted in international commercial contracts¹³¹. The first type provides that potential controversies will be referred to courts either from one of the party’s jurisdiction or

126 Decision given by the German American Mixed Commission in the Lusitania Case (RIAA, vol. 7, p.32, at p.35)

127 Decision given by PCIJ in the Chorzów Case (Factory at Chorzów, Merits, Judgement No. 13, PCIJ Series A, No.17 (1928) pp.47-53

128 Those provisions are repeated at the UN Convention on the Treaties Concluded Between States and International Organisations or Between Two or More International Organizations, which, as mentioned above, is also recognised as part of customary international law.

129 See Nuclear Tests Cases ICJ Reports (1974) p.268.

130 Corfu Channel Case ICJ Reports (1949) p.18.

131 See Park, (1998), Delaume, (1989), Delaume (1985), and Zimbler, (1986).

from a major money centre such as London or New York¹³². The second type refers the dispute to arbitration, under the terms and conditions specified by the contracting parties. On the third type disputes are referred to arbitration according to the rules established under the ICSD. Under the World Bank’s Loan Agreement the dispute resolution system adopted by the parties is arbitration, as provided in the General Conditions, Article X, Section 10.04. The clause reads as follows:

“Any controversy between the parties to the Loan Agreement or the parties to the Guarantee Agreement, and any claim by any such party against any other such party arising under the Loan Agreement or the Guarantee Agreement which has not been settled by agreement of the parties shall be submitted to arbitration by an Arbitral Tribunal as hereinafter provided.”

The following subdivision provides an extensive explanation of how the arbitral tribunal will be set up, how it is supposed to reach its decisions, and to what extent the parties are bound by its decisions. In particular letter (h) states that “each party shall abide by and comply with any such award rendered by the Arbitral Trib unal in accordance with the provisions of this Section”. Therefore the dispute resolution system design under this contractual clause implies not only the consent of the parties to settle their dispute out of court, but also that they agree to be bound by the result.

The strength of an arbitral award must be determined from the outset. This is a form of dispute resolution that is legally binding on the parties, in contrast to some other forms of dispute resolution - such as mediation and conciliation - which do not possess this characteristic. Moreover, in many jurisdictions arbitration awards are recognised and enforced¹³³ subject only to a limited numbers of defences related to procedural matters, such as the validity of the arbitration agreement, the oppor tunity to

132 Auerback, (1993).

133 See Convention on the Recognition and Enforcement of Foreign Arbitral Awards, (1958) 330 UNTS 3 as supplemented by the European Convention on International Commercial Arbitration (1968) 484 UNTS 349 to which 123 countries are parties.

be heard, and the limits of the arbitral jurisdiction.¹³⁴ Regarding the appropriateness of arbitration as a choice of dispute resolution under the loan and guarantee agreements, it is appropriate to say that as an international agreement where the parties might fear the other side’s judicial system, arbitration serves to level the playing field and therefore can be regarded as an adequate policy. Moreover, as interpretation of terms and conditions that are particularly characteristic of multilateral development institutions’

lending activities might be necessary, an arbitral tribunal can provide the adequate level of expertise.

The parties to the agreements are those who are entitled to require an arbitral procedure. This means that the Bank, the borrower or the guarantor can in the event of a dispute rely on the arbitration clause present at the General Conditions applicable to the Loan and Guarantee Agreements. However, the theory of privity of the contract states that only the parties of the contract are allowed to rely on its clauses and demand the recognition of rights derived from it. Even if it is recognised that exceptions to the theory are allowed under some legal systems, it is also true that questions on standing to sue will appear in cases based on the liability towards third parties from harm caused by the implementation of the contract. Even more importantly, the legitimacy of the arbitral tribunal could be raised in tort cases where third parties are involved.

Another important feature to be considered is the possibility of enforcement of the arbitral tribunal’s final decision. Firstly, on both sides of the Loan and Guarantee Agreements are States and an international organisation. This could give rise to sovereign immunity or ‘act of State’ defences for member countries, or international institutions immunities defences, especially if enforcement in a foreign jurisdiction (different from the member country involved in the dispute) is needed. In the US, for example, the Act of State Doctrin e generally prevents national courts from questioning

134 Ibid. art. V.

a foreign government’s behaviour concerning assets within its territory¹³⁵. Therefore, if for instance the borrower restricts payment of foreign currency obligations and justifies this action as a state action needed to protect domestic economy this could interfere with the loan repayment. In private loan obligations creditors have been able to avoid application of the Act of State doctrine by manipulating the situs of the debt¹³⁶. This means that courts may deem the debt to be located outside the territory of a country imposing the exchange controls. However, when enforcing arbitration awards, rather than judicial decisions, some countries, such as the US, have eliminated the Act of State as a possible defence¹³⁷.

As to defences based on sovereign immunity, they are subject to some exceptions. In most legal systems the sovereign immunity granted in foreign court covers only ‘public’ acts rather than ‘commercial’ acts¹³⁸. To characterise an act as public or commercial it is important to determine the nature of the act¹³⁹. In this context Loan and Guarantee Agreements are seen as commercial transactions and therefore will not allow sovereign immunities defences¹⁴⁰. Moreover, in some legal systems to rely on sovereign immunity defences in actions to enforce an arbitration agreement or to confirm an arbitral award is much more difficult given the treaties regulating arbitration clauses¹⁴¹. This reinforces the adequacy of arbitral awards as a means of dispute resolution in Loan contracts.

Another good argument against defences based upon immunities is the fact that, by agreeing to submit a dispute to an arbitral tribunal, the parties – both the Bank and member countries - have waived their immunity from suit and therefore should not be allowed to defend themselves on these grounds when enforcement in finally needed.

135 Park , (1998).

136 Ibid.

137 Federal Arbitration Act (1994) 9 U.S.C. § 15.

138 Restrictive doctrine. See Oparil, (1991).

139 Ibid.

140 See for United States, 28 U.S.C. § 1603 (d), for British regulation see State Immunity Act, 1978 ch. 33

§ 3 (3) (b).

141 See for United States, (1994) 28 U.S.C. § 1605 (a), for British regulation see State Immunity Act, 1978 ch. 33 § 9.

However, the clause on enforcement under the Loan Agreement has a very peculiar provision. It reads as follows:

(k) “If, within thirty days after counterparts of the award shall have been delivered to the parties, the award shall not be complied with, any party may: (i) enter judgment upon, or institute a proceeding to enforce, the award in any court of competent jurisdiction against any other party; (ii) enforce such judgment by execution;

or (iii) pursue any other appropriate remedy against such other party for the enforcement of the award and the provisions of the Loan Agreement or the Guarantee Agreement. Notwithstanding the foregoing, this Section shall not authorize any entry of judgment or enforcement of the award against any party that is a member of the Bank except as such procedure may be available otherwise than by reason of the provisions of this Section.” (emphasis added)

Despite the difficult draft of the provision Delaume correctly explains that

“enforcement will be possible only to the extent permissible under the relevant domestic immunity rule”¹⁴². This means that by agreeing with the arbitration clause member countries have waived their immunity from suit and are subjected to the arbitral court. Nonetheless enforcement against them is restricted to what is allowed under municipal law of the country where enforcement will take place. Therefore, although the contractual rights on dispute will be subjected to the arbitral tribunal, which will base its decision on international law, the enforcement of arbitral decisions will depend on the domestic law of the forum where proceedings are brought, and which will decide on issues of sovereign immunities.

If an arbitral award needs to be enforced against the Bank, it seems that the borrower, or the borrower and the guarantor, can institute proceedings in any court of competent jurisdiction¹⁴³. Therefore, the arbitration clause in relation to awards rendered against the Bank serves as a waiver of the Bank’s immunity from the

142 Delaume, (1985).

143 Broches (1995) page 52.

jurisdiction of domestic courts even in actions brought by member countries. This constitutes an exception to the charter rule prohibiting member governments from bringing actions against the Bank¹⁴⁴.