The curious case of an arbitration with two annulment courts: comments on the YPF saga

Abstract

This article deals with the jurisdictional and substantive issues of a Latin American multi-party, multi-contract arbitration, related to a dispute arising out of a contract for the international sale of natural gas, which contained an arbitration agreement, calling for ICC arbitration in Montevideo. This arbitration agreement contained a clause in which the parties expressly agreed to apply Argentine arbitration law to annulment procedures and granted exclusive jurisdiction to the Argentine courts to hear any challenge to the prospective award. Eventually, there was a debate on the validity of this clause and the Argentine and Uruguayan courts claimed to have exclusive jurisdiction to hear annulment petitions. This article addresses the different approaches under which this issue can be analysed, and concludes that the parties’ choice of forum should be respected. Regarding the substantive issues, one part of the case that involved the claimant and two of the respondents was governed by the Contracts for the International Sale of Goods (CISG).1 Among other aspects, this article explains that the standard to consider an anticipatory breach is very high, so that mere manifestations that the basis of the contract has been affected are not enough to consider such kind of breach. Moreover, it explains that the intention of the breaching party is not a relevant factor to determine compensation, since the CISG is based on an objective regime, in which foreseeability is the relevant factor.