This dispute concerned Fraport AG Frankfurt Airport Services Worldwide’s (“Fraport”) application for annulment of an ICSID award issued on 16 August 2007.
This arbitral award had been the result of a dispute in relation to a concession agreement for the construction and operation of a terminal at the international airport in Manila. In 2002, Respondent, through the President of the Philippines, had declared it would not uphold its obligations under the agreement, which it determined to be void.
As a result, in 2003, Claimant (Fraport) filed a Request for Arbitration under the Bilateral Investment Treaty between the Federal Republic of Germany and the Republic of the Philippines on the Promotion and Reciprocal Protection of Investments (“BIT”).
Respondent argued that the Arbitral Tribunal lacked jurisdiction because Claimant’s investment was made in violation of the local laws and thus in violation of Article 1(1) of the BIT. Respondent therefore argued that the investment was not protected by the BIT and so Claimant’s claims were inadmissible.
The Tribunal sided with the Respondent and ruled that it lacked jurisdiction in its final award.
Consequently, Fraport filed for the annulment of the award in accordance with Article 52(1) of the ICSID Convention, on the grounds that the Tribunal had manifestly exceeded its powers, that there was a serious departure from a fundamental rule of procedure and that the award failed to state its reasoning.
Fraport argued that the Tribunal had exceeded its powers in three respects: the Tribunal had interpreted Article 1(1) of the BIT as a substantive requirement instead of a jurisdictional one, the Tribunal had failed to analyze Claimant’s entire investment and the Tribunal had failed to identify a violation of local laws. The Annulment Committee rejected all three arguments and ruled that the Tribunal had not manifestly exceeded its powers.
Fraport also argued that the Tribunal had violated its right to a fair trial, and more precisely the principles of nullum crimen sine lege and in dubio pro reo, as well as its right to be heard, amounting to a serious departure from fundamental rules of procedure. The Committee ruled that the principle of nullum crimen sine lege was not a rule of procedure and that the principle in dubio pro reo could only apply in criminal proceedings.
On the other hand, the Committee accepted the violation of Claimant’s right to be heard, leading to the annulment of the award.
Third and finally, the Committee rejected Claimant’s allegations that the Tribunal had failed to state reasons in its award.
While Fraport’s application for annulment was successful, which is rare, after refiling new claims Fraport would ultimately see its claims dismissed for lack of jurisdiction by a new arbitral tribunal