Originally from American Review of International Arbitration - ARIA

Preview Page

I. INTRODUCTION

“[A]rbitration claims to be free. The will of the parties . . . will be overriding. No rules shall be applied, no control exercised — at least until enforcement is sought.”1

The aim of this article is to examine the extent to which the principle of party autonomy a) is respected in ICSID2 arbitration and b) helps investors structure a dispute resolution mechanism that will facilitate the resolution of disputes with a host state. We will examine these issues using the example of a hypothetical U.S. investor, Potable Inc. (“Potable”), which is contemplating whether to resolve its dispute with the Republic of Argentina through ICSID arbitration. Before we proceed further, let us consider the background to the dispute, and the other dispute resolution mechanisms available to Potable.

A. Background

Since the early 1990s, Potable, a company specializing in water services, was keen to penetrate the Latin American market. Argentina had been identified as a “sweet spot”3 as its newly elected President, Carlos Menem, was trying to privatize Argentina’s state-owned water services and expand the water and sewage network. To this end, Menem was issuing a call for bids for the state-owned water and sewage company.