[Ed: On the cusp of what looks to be yet another long weekend on Wall Street, this cautionary tale by Chandra.] After enacting policies to stem the economic crisis of 2000-2002, Argentina is locked in multiple arbitrations with foreign investors who were hurt by the government’s actions, which included freezing foreign assets and prices. Most of these disputes revolve around claims that Argentina’s government violated the terms of the US-Argentina Bilateral Investment Treaty, a trade agreement made in 1994. Argentina claims that under Article 11 of the treaty, it was released from the agreement when it had to enact emergency measures to “maintain public order.” Argentina also cites the “state of necessity” standard that is customary under international law. Many of these disputes were sent, with both parties’ consent, to The International Centre for Settlement of Investment Disputes, known as the ICSID, located in Washington, D.C. The ICSID is an institution with over 140 member states that helps independent tribunals facilitate arbitrations by providing institutional and procedural frameworks and facilities. It was created by the Executive Directors of the International Bank for Reconstruction and Development (the World Bank) under the Convention on the Settlement of Investment Disputes between States and Nationals of Other States in 1966. The main goal of the Convention was to increase flows of private investment between countries by creating an impartial forum providing facilities for international investment disputes. Currently the ICSID is the leading arbitration institution for investor-State dispute settlement. In some disputes the ICSID tribunals found that Argentina’s actions were “necessary” to protect “essential security interests” and were therefore absolved under Article 11 of the treaty. For instance, Continental Casualty, a U.S. investor, sought $112 million (US) in damages; however they were only awarded $2.8 million because most of Argentina’s actions were found necessary. On the other hand, some tribunals found that Argentina was not in a “state of necessity” at the time of its actions under the stringent tests imposed by customary international law. For instance, in another case the tribunal awarded a US-based energy firm $133 million (US) in compensation. In total so far, Argentina owes over three-quarters of a billion US dollars to various plaintiffs for damages incurred during the crisis, and there are still more disputes to be decided. In these unprecedented financial times, it would be prudent for countries to remember that “emergency actions” still have legal ramifications after the crisis has been abated. The current global financial crisis has encouraged the United States government to take emergency actions such as the Federal Reserve Bank’s contentious bail-out of AIG. The terms of this deal state that the U.S. government owns 79.9% of equity interest in AIG, with the right to veto dividend payments to preferred shareholder in the deal. The seizure of Washington Mutual will lead to some shareholders’ and bond-holders’ accounts being wiped out. In England, Prime Minister Gordon Brown endorsed Lloyd’s TSB takeover of Halifax Bank of Scotland, despite anti-trust concerns. The ICSID will probably be seeing arbitrations in the future regarding these and other controversial moves that affect foreign investors. Only stringency tests and future tribunal interpretations will tell if the “state of necessity” argument will hold. Links: ICSID’s website: http://icsid.worldbank.org/ICSID/FrontServlet US-Argentina BIT: http://www.bilaterals.org/article.php3?id_article=435 Article on Continental Casualty’s Dispute: http://www.investmenttreatynews.org/cms/news/archive/2008/09/10/award-continental-casualty-company-v-the-argentine-republic-argentina-emerges-largely-victorious-in-dispute-related-to-country-s-financial-crisis.aspx Official Award given to Continental Casualty: http://www.investmenttreatynews.org/documents/p/24.aspx Information on various Argentina arbitrations from Investment Treaty News: http://www.iisd.org/pdf/2007/itn_oct15_2007.pdf Article on the seizure of Washington Mutual: http://www.nytimes.com/2008/09/26/business/26wamu.html?_r=1&hp&oref=slogin

Immigration is a hot topic in today’s global economy as travel becomes cheaper and labor markets become more fluid. However, the rules of immigration can be tricky and, in some cases, contradictory. For instance, in the U.S., the Ninth and Second Circuit Courts of Appeals gave two different rulings on the same issue. In the case of Orozco vs. Mukasey, the Ninth Circuit Court of Appeals found that, “a person who obtains entry into the United States by fraudulent means is statutorily ineligible for adjustment of status.” Brian Orozco entered the United States using someone else’s green card and then married a U.S. citizen who successfully filed an I-30 on his behalf. Later, he was put under removal proceedings. During the proceedings he applied for an adjustment of status, arguing that according to the law, he was eligible to file for permanent residence as he was inspected and admitted, even though his documents were fraudulent. To overcome his fraudulent entry, Orozco filed an INA § 212(i) waiver. First, the Court found that, “an alien, such as petitioner, who obtained admission by fraud, has not been “admitted” to the United States.” Second, the Court upheld the immigration judge’s ruling that lawful admission is a requirement for adjustment of status that cannot be waived, even by an accepted 212(i) fraud waiver. As a result, Orozco was denied adjustment of status; however, on May 12, 2008, the Court referred the case to the circuit mediator in response to a joint request by both parties to reach a decision through mediation, not litigation. Both sides thought that further administrative adjudication may be possible for the removal case; they plan to discuss these possibilities in mediation before the case once again goes before the Board of Immigration Appeals or an immigration judge. Pending on what is decided during mediation, it is possible that the Court’s current ruling may not be the final decision on the case. On the other hand, in April of 2008, the Second Circuit Court of Appeals ruled that immigrants who entered the U.S. on fraudulent documents could file a waiver application and adjust their status. In this case, Emokah vs. Mukasey, a Nigerian woman entered the U.S. using a false passport. The Court ruled that while she was inadmissible at the time of her entry due to her false documents, she still cleared entry and inspection and was legally “admitted.” This made her eligible to apply for a status change with a hardship waiver, though the judge ultimately denied her waiver. This post was written by Chandra Srivastava. Links: American Immigration Law Foundation Practice Advisory on Orozco vs. Mukasey: http://www.ailf.org/lac/pa/orozco-pa.pdf Official joint motion to refer the matter to mediation: http://www.ailf.org/lac/chdocs/OrozcoCtDocs.pdf Official case: http://vlex.com/vid/36607455 Alternative blog opinions: http://www.philadelphiaimmigrationlawyerblog.com/2008/05/orozco_v_mukasey_does_fraudule_1.html http://www.4immigration.com/index.php?option=com_content&task=view&id=247&Itemid=46

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My good friend Dicky Hile has been studying the ethics of arbitration provisions in attorney-client contracts for some time. He recently put down his thoughts and was kind enough to send us his paper. My personal viewpoint is that it is almost impossible to make these ethical, and their enforceability is still very much in doubt.