The long running dispute between RSM Production Corporation (hereinafter RSM) and the Central African Republic[1] is not over yet. After RSM decided to submit its application for annulment to the ICSID Secretary General, Meg Kinnear, and the ad hoc Committee rejected that application, RSM’s President and CEO, Jack Grynberg, has now sued the World Bank and its Secretary based on a failure to disclose information by one of the members of the annulment committee.
Background
The arbitral award in the dispute over the exploration of oil fields bordering Chad awarded RSM only US$27,000 of the US$122 million claim. The panel decided that the five-year contract was against the country’s national petroleum law that sets a maximum of four years for such agreements.
Not being satisfied with the award, the Colorado oil company, RSM, requested an annulment, as the arbitral award was "premised on contradictions and made no sense".
Consequently, the Secretary-General registered the application for annulment of the award filed by RSM, and notified the parties of the provisional stay of enforcement of the award.
The annulment Committees
The Chairman shall appoint an ad hoc Committee in accordance with the limitations of Article 52 of the ICSID Convention. In spite of this, the constitution of the panel was not free of controversy. ICSID initially proposed Prof. Rolf Knieper as a member of the panel, however RSM objected on the basis of his employment ties to the Central African Republic. By December 2011, the Lebanese-French arbitrator Nayla Comair Obeid was appointed and RSM disqualified her “on a number of grounds”. Nevertheless, before the challenge was solved, Mrs. Comair Obeid, resigned on the basis of Article 52(3) that forbids the appointment of ad hoc Committee members who share the same nationality as members of the original tribunal.
Finally, an ad hoc Committee was constituted by Bernardo Cremades, Fernando Mantilla Serrano and Abdulqawi Ahmed Yusuf, and they dismissed the request for an annulment in accordance with ICSID Arbitration Rules 53 and 38(1).
The lawsuit
RSM filed a lawsuit in a district court in Washington DC based on a failure to disclose a conflict of interest. According to RSM, the law firm in which Mr. Mantilla is a partner, Shearman & Sterling, has a very lucrative client relationship with China National Petroleum Corporation that would be the largest financial loser if RSM prevailed in the arbitration.
According to RSM, when the company filed the request for the annulment of the ad hoc Committee's decision, Madame Kinnear "unilaterally" declared that such request could not be registered. In words of RSM, there was "a blatant violation" of the ICSID Convention, the Centre’s rules and "fundamental principles of natural justice". Moreover, the company argued that ICSID Secretary General has "no screening power" over a timely annulment application.
RSM has requested the DC court to declare the company's right to have the annulment request decided by arbitrators, direct the defendants to register the request, and declare that ICSID and the World Bank Group are contractually bound to RSM to ensure that its dispute is heard by a panel of arbitrators who have fully disclosed their interests.
Additionally, Mr. Grynberg has written an open letter to the President of the World Bank and Chairman of the ICSID, Jim Yong Kim. In his letter Mr. Grynberg asks Mr. Kim to clarify whether
“1) Is it acceptable that decisions made by ad-hoc Committees whose members turn out to have conflicts of interest should be immune from review?
2) Is it acceptable that the appointment of ad-hoc Committee members who turn out to have failed to comply with their duty to disclose conflicts of interest in breach of the requirements of impartiality and independence should be immune from review?
3) Is it acceptable that the Secretary-General of ICSID exercises a judicial power to block a prima facie conflict of interest from being reviewed by an impartial and independent ad hoc Committee? In purporting to exercise such power is the Secretary-General acting within their authority and, if so, from where does that authority derive?
4) How do you select and appoint members of an ad-hoc Committee?”[2]
ICSID has not made any comments up to today, and the dispute does not seem to be close to a settlement. Time will tell us how the dispute ends…
[1] ICSID Case No. ARB/07/2, RMS registered on January 18, 2007 a claim against the Central African Republic
[2] Open letter dated 30 May 2013 to Dr Jim Yong Kim, President of the World Bank and Chairman of ICSID that can be accessed online (http://www.prnewswire.com/news-releases/jack-grynberg-sues-the-world-bank-group-and-icsid-over-concerns-of-conflicts-of-interest-209710801.html)