Introduction

The Max Planck Encyclopedia of International Law defines ‘mass claims’ as compensation sought when a large number of parties have suffered damages arising from the same diplomatic, historic, or other event.¹ In that sense, mass claims have existed for a long time. Given the diplomatic and historical nature of the term, mass claims have existed primarily on the public international law landscape, leaving little space for private international law interests to fall within its scope. However, given the relatively recent grafting of private international dispute settlement into the public international law stem through investment arbitration, there is a new-found room for mass claims. This has been subject to almost microscopic analysis in the Abaclat and subsequent Argentine Bond Crisis cases (Alemanni and Ambiente). With the recent case of Adamakopoulos v. Cyprus, the topic has once again gained traction.

This article firstly evaluates the existing state of mass claims with a particular reference to the position taken by the investment tribunals when dealing with mass claims. In the process, the article identifies the grey areas in that context. To this day, no mass claim case has reached the final award stage, and the practicality of mass claims and related solutions remain untested. Hence, every model must be taken with a grain of salt.

Abaclat

The approach of the majority tribunal, in the Abaclat case, has been subject to severe criticism. The award on jurisdiction was also strongly dissented by Prof. Abi Saab, the president of the tribunal.²

In this case, the tribunal was confronted with a question of dealing with 60,000 Claimants. In the decision on jurisdiction, some interesting findings were rendered by the majority tribunal. Its label as a “mass claim” by the majority tribunal, changed the nature of arbitration and created a set of procedural problems which are not addressed in the International Centre for Settlement of Investment Disputes (“ICSID”) Convention or the Rules.

The majority tribunal considered, in the absence of specific rules, it had jurisdiction to fill gaps to adapt procedures in a manner most suitable for such a vast number of Claimants. Arguably, the tribunal overlooked the consent related implications that such an adaptation would bring with it. In essence, the majority stated that as long as there is jurisdiction over one Claimant, jurisdiction can be extended to cover any number of Claimants. It characterised the adaptation as an issue of admissibility.³

Labelling a claim as a mass claim could mean two things – either it is a claim, which groups separate Claimants into a single process or it is a class action which is a claim brought by one party on behalf of a specific class of individuals. The majority tribunal adopted a hybrid approach, stating that even though the claims were separate, there was an element of class action present in the case at hand.

In practical terms, the tribunal was required to adapt procedural changes, since as mentioned before, mass claims are not addressed in the ICSID Convention. The article will now turn to the consequences that these variances gave rise to.

The consent lies at the heart of investment (or any) arbitration, because it is a determinative factor for the jurisdiction of an investment tribunal. In investment arbitration, unlike commercial arbitration, States issue a standing offer to arbitrate (State’s consent), which is accepted by the Investor (Investor’s consent) at the initiation of the investment arbitration process.

When a State consents to arbitration under the ICSID, it does so with the belief that it will be subject to a specific procedure enshrined in the ICSID convention and/or ICSID arbitration rules. Hence, the question is, if one creates a variance of process, would it not be in direct conflict with the consent of the state and a question of jurisdiction? The majority tribunal believed otherwise and hence characterised issues of procedural changes as admissibility.

If the tribunal is not delegating its adjudicatory powers, then there is no problem of jurisdiction which arises. However, it is in this regard that the majority tribunal delegated its adjudicatory power to someone else (for example an algorithm or a system). If that is the case, the tribunal requires additional consent, causing the question to become one of jurisdiction.

Ambiente

In Ambiente, the number of Claimants was significantly lower, i.e., 90 Claimants. In this case, the majority tribunal distinguished the “multi-party” claim from the “class action- or mass claim-type collective proceedings”.⁴ Moreover, the tribunal rejected the idea that the number of Claimants might in itself call for the adaptation of procedural arrangements to guarantee the manageability or fairness of the case.

As to the scope of Argentina’s consent to multi-party proceedings, the tribunal expressed doubts as to whether there could be a potential threshold based on a maximum number of Claimants. In any case, in the majority tribunal’s opinion, 90 Claimants did not exceed any applicable threshold.⁵

Alemanni

The tribunal in Alemanni, carefully, and rightly distanced itself from Abaclat. The tribunal ruled there was no need or provision in ICSID for such mass claims, but the provisions called for a multi-party proceeding.⁶ It is worth noting that the number of Claimants was once significantly lower in than in Abaclat. Additionally, it was argued this case centered on the same dispute and for reasons of maintaining homogeneity, should be characterising as a multiparty matter.

Adamakopoulos

The award on jurisdiction, in this case, was rendered on 7 February 2020. The majority tribunal took a nuanced approach. Drawing on Abaclat, the tribunal also considered the term of mass claim not to mean a class action arbitration.⁷

By distinguish itself from Abaclat, the majority tribunal stated that it does not have the power to adapt the process. Consequently, the majority refrained from creating a special procedure, but adopted the reasoning from Alemanni, which emphasised the importance of claims constituting a single dispute given their homogeneity.

Contemporary institutional framework

The contemporary architecture of the treaties is not well equipped to deal with mass claims. The class action rules of the American Arbitration Association (AAA)⁸ for example are vastly different from the ICSID framework as there is no ability to certify a class or for its decision to be reviewable by a court. Consequently, Claimants’ right to determine the arbitrator is hampered. It also deprives the Respondent of the right to have each dispute adjudicated separately.

Conclusion

The Abaclat case has created some interesting notions of dealing with mass claims in the context of investment arbitration. The common theme and general consensus in Abaclat and the later cases has been that investment arbitration currently lacks a framework for handling mass claims. At present, if the tribunal is not delegating its adjudicatory powers, then there is no problem of consent and consequently jurisdiction. However, if the number goes over a certain threshold and the tribunal delegates the authority to a system or an adaptation of the system, then it becomes a question of jurisdiction.

An easier answer to the question at the outset would be to deal with mass claims as a multi-party issue. However, vast Claimant numbers would make this a difficult endeavor, worsened by the lack of a substantial framework of treaties and ICSID rules addressing these contexts. In handling mass claims, the consent-related issues are the ones that the tribunals must keep in mind.

Footnotes

1 HM Holtzmann, ‘Mass Claims’ in Max Planck Encyclopedia of Public International Law

2 Abaclat v. Argentina, Decision on Jurisdiction and Admissibility, Dissenting Opinion of Professor Georges Abi-Saab, 28 October 2011, ICSID Case No. ARB/08/9

3 Abaclat v. Argentina, Decision on Jurisdiction and Admissibility, 4 August 2011, ICSID Case No. ARB/08/9, para 492

4 Ambiente v. Argentina, Decision on Jurisdiction and Admissibility, 8 February 2013, ICSID Case No. ARB/08/9, para 134

5 Ibid, para 148-151

6 Alemanni v. Argentina, Decision on Jurisdiction and Admissibility, 17 November 2014, ICSID Case No. ARB/07/8, para 276

7 Adamakopoulos v. Cyprus, Decision on Jurisdiction, 7 February 2020, ICSID Case No. ARB/15/49, para 190

8 American Arbitration Association, ‘Supplementary Rules for Class Arbitration’

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