In the latest of many ICSID decisions against Argentina in recent months, an ICSID tribunal recently rendered a final decision in the long-running proceedings between Vivendi and Argentina.

The dispute arose when various actions taken by the provincial government of the Argentine province of Tucuman in the 1990's (including unilaterally imposing tariff reductions and politicizing decisions of the regulatory agency) impacted upon the water concession operated by Vivendi's subsidiary.

In finding that Argentina had breached the Bilateral Investment Treaty (BIT) between Argentina and France, the tribunal rejected Argentina's argument that the fair and equitable treatment protection provided for under the BIT should be restricted to a "minimum standard of treatment under international law". Rather, it held that instead of applying a particular standard to the question of fair and equitable treatment, a tribunal should decide if in all the circumstances the conduct in issue is fair and equitable. It also commented that claims of unfair and inequitable treatment are not limited to claims for denial of justice.

In addition, the Tribunal provided a useful insight into expropriation by a State, holding that regulatory measures can amount to expropriation, even where there is no bad faith involved. It added that the effect of a measure, rather than the state's intent, is the critical factor to determine whether a measure is expropriatory.

Although Vivendi was successful in its claim, the tribunal limited the damages awarded to the actual value of its investment (following the Chorzow Factory case). It rejected Vivendi's lost profits claim as Vivendi had failed to establish with a sufficient degree of certainty that the concession would have been profitable, although it did indicate that a history of demonstrated profitability would have led it to make a far higher award. (see Compania de Aguas del Aconquija & Vivendi v. Argentina ICSID Case No. ARB/97/30.