President Allende Foundation, Victor Pey Casado and Coral Pey Grebe v. Republic of Chile

Case summary

At a glance

Parties: "President Allende" Foundation, Victor Pey Casado and Coral Pey Grebe (Spain) v. Republic of Chile
Case no.: PCA Case No. 2017-30
Forum and rules: UNCITRAL Arbitration Rules 1976, administered by the PCA. The claimants state that the seat is in Switzerland.
Treaty: Spain–Chile BIT of 2 October 1991 (Article 10)
Tribunal: Prof. Bernard Hanotiau (Presiding Arbitrator), Prof. Dr. Hélène Ruiz Fabri, Mr. Stephen L. Drymer
Sector: Newspaper publishing (El Clarín)
Outcome: Procedural only. On 27 June 2018 the Tribunal bifurcated Chile's jurisdictional objections Nos. 1–4 and joined Objection No. 5 (the Goss machine case) to the merits. The published documents do not show a final award.
Amount: Claimed: USD 315.7–385.9 million (value at 31 August 2017); in the alternative, USD 75.6 million for unjust enrichment; moral damages of at least USD 5,000,000 (Coral Pey Grebe) and USD 500,000 (the Foundation).

The dispute

The claimants say they own Consorcio Publicitario y Periodístico S.A. (CPP), which owned the Chilean newspaper El Clarín. The military government seized the paper after the coup of September 1973. Decree No. 165 of 10 February 1975 dissolved CPP and Empresa Periodística Clarín Ltda. and transferred their assets to the State. An earlier ICSID arbitration (ARB/98/2) ended in several decisions. The 2008 First Award found a denial of justice and a breach of fair and equitable treatment, but held that the expropriation fell outside the BIT's temporal scope. The 2016 Resubmission Award granted only satisfaction. In this UNCITRAL case the claimants rely on conduct after 8 May 2008, which they say breached Articles 3, 4, 5 and 10(5) of the BIT. They point to four things: Chile did not comply with the First Award; Chile concealed the 24 July 2008 judgment of the First Civil Court of Santiago in the Goss printing press case, and the courts then held that Pey Casado had abandoned the proceedings; the courts applied the statute of limitations to that claim; and Chile did not disclose its links with Essex Court Chambers, whose members included two Resubmission Tribunal arbitrators. Chile objects on several grounds: ICSID exclusivity under Article 26 of the ICSID Convention, the forum-selection clause in Article 10(3) of the BIT, res judicata and lis pendens, and the absence of a protected investment at the time of the alleged breaches.

Key holdings

Article 21(4) of the 1976 UNCITRAL Rules creates a presumption that jurisdiction is decided as a preliminary question. The presumption is not absolute, and the Tribunal keeps discretion. Procedural Order No. 2, ¶¶ 63–64
Bifurcation depends on four factors: whether the objections are prima facie substantial, whether bifurcation saves cost and time, whether the objections are closely intertwined with the merits, and whether the parties' procedural rights are preserved. With only the Notice of Arbitration before it, the Tribunal postponed its decision until both sides had filed their first-round memorials. Procedural Order No. 2, ¶¶ 66–70
The Tribunal rejected Chile's request to dismiss the case outright after one round of pleadings. It found that the dispute raises complex legal and factual issues that need further submissions. Decision on Bifurcation, ¶ 98
Objection No. 1 (no power to grant the relief requested) and Objection No. 2 (the BIT does not apply because there was no investment at the time of the alleged breaches) are prima facie serious. If upheld, either would dispose of the whole case, and each can be decided without ruling on the merits. Both are heard as preliminary questions. Decision on Bifurcation, ¶¶ 103–113
Objection No. 3 (claims for non-performance of the First Award) and Objection No. 4 (claims about Essex Court Chambers) are also bifurcated. If upheld, either would reduce the number of claims, and both can be heard without touching the merits. Decision on Bifurcation, ¶¶ 114–115
Objection No. 5 (claims based on the Goss machine case) is joined to the merits. Deciding it would require the Tribunal to determine whether the denial of justice found in the First Award covers lesser breaches, which goes to the content of the BIT's standards of protection. Decision on Bifurcation, ¶¶ 116–118