In a decision dated 12 September 2016, the Tribunal in Standard Chartered Bank (Hong Kong) Limited v Tanzania Electric Supply Company Limited (TANESCO) (ICSID ARB/10/20) revisited its decision not to order payment of any amount owing to the Claimant by the Respondent, and ordered the payment of the amount owed, due to the Respondent having misled the Tribunal in respect of material facts.
The dispute arose out of a Power Purchase Agreement dated 26 May 1995 (the “PPA”), concluded between the Respondent and Independent Power Tanzania Limited (“IPTL”). The Claimant brought its ICSID claim in its capacity as Security Agent as assignee of IPTL’s rights. The Respondent is an entity wholly owned by the United Republic of Tanzania, and designated to stand in an ICSID arbitration as an agency of Tanzania.
The Claimant originally sought a declaration from the Tribunal that the Respondent owed it outstanding payments under the PPA in the sum of US$ 258.7 million or a declaration that it owed a sum sufficient to discharge the Claimant’s loan to IPTL in full, and an order to pay US$ 138 million to discharge its loan or to pay the amount under the PPA.
In its decision on jurisdiction and liability of 12 February 2014 (the “Decision”), the Tribunal was concerned that an order requiring the Respondent to pay the Claimant could have interfered with IPTL’s administrator’s or liquidator’s rights (if one had been appointed, which the Tribunal believed was a real possibility), and therefore decided that while it could make a declaration of the amount owed by the Respondent to the Claimant, it could not make an order for payment of that amount.
The Claimant subsequently argued that the Respondent had misled the Tribunal by failing to disclose that it had settled a dispute with IPTL under the PPA, making the possibility of IPTL being put into liquidation much more remote, and had emptied an escrow account of funds (which funds the Tribunal had believed, at the time of the Decision, would provide some protection for the interests of the Claimant in collecting any judgment).
The Claimant argued that the Tribunal had the power to reconsider its Decision under the ICSID Convention (“Convention”) or the ICSID Arbitration Rules (“Rules”).
The Tribunal observed that there is nothing in the Convention or the Rules expressly addressing the question of reconsideration of a decision. The Tribunal considered whether, notwithstanding the lack of any provision in the Convention relating to the finality of decisions, a decision of a tribunal is nevertheless final and thus not subject to being re-examined.
The Tribunal opined that, to the extent that the Tribunal in ConocoPhillips v Venezuela (ICSID Case No. ARB/07/30) stated that all decisions of ICSID tribunals are final, such a statement was, at the very least, too broad. The Tribunal’s view was that it is incorrect to characterise the decisions of ICSID tribunals, as opposed to their awards, as final; decisions are binding within the scope of the proceedings but do not impose obligations upon the parties or other Contracting States outside the proceedings as is the case with awards.
The Tribunal observed that the context in which the Decision was made was substantially different from that which the Tribunal had been led to believe, and that the facts the Respondent failed to disclose were material and would have had an impact on its decision not to make an order for payment. The Tribunal therefore concluded that there were grounds for revisiting its decision and reversing its original conclusion, and it decided that it could make an order for payment of the amount owed by the Respondent to the Claimant. The Tribunal ordered that the Respondent pay to the Claimant US$ 148.4 million plus interest.
The Tribunal’s decision to reopen and reverse its original decision is significant in light of the absence of specifically relevant provisions in the Convention and the Rules, and ICSID tribunals’ previous refusals to re-examine their decisions. The decision emphasises an important distinction in the finality of rulings that are not expressly designated as final and awards issued by the tribunal; unless otherwise stated, decisions made prior to a final award can be reopened by the same tribunal if, on the basis of new and material evidence emerging following that decision, the tribunal might have reached a different decision.