Claims "manifestly without legal merit": ICSID tribunal interprets rule 41(5) | Practical Law

Claims "manifestly without legal merit": ICSID tribunal interprets rule 41(5) | Practical Law

ICSID arbitration rule 41(5) permits early objections to claims which are "manifestly without legal merit". In Trans-global Petroleum Inc v Jordan (ICSID Case no ARB/07/25), the tribunal has given the first ruling on the proper interpretation of this provision.

Claims "manifestly without legal merit": ICSID tribunal interprets rule 41(5)

Practical Law Legal Update 0-382-5678 (Approx. 3 pages)

Claims "manifestly without legal merit": ICSID tribunal interprets rule 41(5)

by PLC Dispute Resolution
Published on 15 Jul 2008International, USA
ICSID arbitration rule 41(5) permits early objections to claims which are "manifestly without legal merit". In Trans-global Petroleum Inc v Jordan (ICSID Case no ARB/07/25), the tribunal has given the first ruling on the proper interpretation of this provision.
The tribunal noted that objections under rule 41(5) involved a truncated procedure, but nevertheless had the potential (should the tribunal uphold the objection) for a legal award to be made against a claimant. It concluded that the provision was intended only for clear and obvious cases of "patently unmeritorious claims". The reference in rule 41(5) to "legal" merit indicated that the tribunal was not concerned to determine factual issues (and should not, therefore, exercise its powers to order document production on a section 41(5) application). Despite this, the tribunal was not required to accept at face value any factual allegation which was "manifestly incredible, frivolous, vexatious or inaccurate". Nor need it accept any legal submission which was "dressed up" as a factual allegation.
Applying these principles, the tribunal rejected the challenge to two claims, but confirmed that a third claim was manifestly without legal merit. An award was made recording that the claim was to be treated as having been formally withdrawn by the Claimant with the consent of the Respondent.