## Facts

- Lanco International, Inc. (Lanco), a U.S. company, held shares in a corporation involved in a concession to construct and operate a port terminal in Argentina.
- The concession-related agreement included a forum-selection clause assigning jurisdiction to an Argentine tribunal (Argentine courts/administrative forum) for disputes connected to the agreement.
- A dispute arose between Lanco and the Argentine Republic (Argentina) concerning Lanco’s investment connected to the port-terminal project.
- In March 1997, Lanco notified Argentina of the dispute by letter.
- In September 1997, Lanco sent a further letter stating its consent to submit the dispute to arbitration at the International Centre for Settlement of Investment Disputes (ICSID) under the Argentina–United States bilateral investment treaty (BIT).
- Lanco filed a Request for Arbitration with ICSID on October 1, 1997; ICSID registered the request on October 14, 1997.
- An ICSID tribunal was constituted on March 19, 1998.
- Argentina objected to the tribunal’s jurisdiction, arguing in part that the concession’s forum-selection clause required disputes to be heard in Argentine courts and therefore blocked ICSID arbitration.
- The tribunal bifurcated proceedings and issued a decision limited to jurisdiction (not liability or damages).

## Issues

1. Whether Lanco’s shareholding and related participation in the concession project qualified as an “investment” and whether the dispute was an “investment dispute” within the meaning of the BIT and ICSID Convention Article 25.
2. Whether Argentina’s consent to ICSID arbitration contained in the BIT operated as a standing offer that Lanco could accept by choosing ICSID arbitration.
3. Whether the forum-selection clause in the concession-related agreement assigning disputes to Argentine tribunals prevented the tribunal from exercising jurisdiction over treaty-based claims.
4. Whether ICSID jurisdiction depended on litigation in local courts or exhaustion of local remedies before initiating ICSID arbitration.

## Decision

- The tribunal held that it had jurisdiction over the dispute under the ICSID Convention and the Argentina–U.S. BIT.
- The tribunal found that Argentina’s treaty consent to ICSID arbitration functioned as advance (standing) consent for covered disputes, and that Lanco perfected consent by electing ICSID arbitration in conformity with the BIT.
- The tribunal concluded that Lanco’s equity interest and participation connected to the concession project qualified as an “investment” for jurisdictional purposes.
- The tribunal rejected Argentina’s reliance on the concession’s forum-selection clause as a bar to ICSID jurisdiction, reasoning that treaty-based arbitration rights are distinct from contract-based dispute mechanisms.
- The tribunal declined to treat the BIT’s consent to ICSID arbitration as conditioned on prior recourse to Argentine courts or exhaustion of local remedies, absent a clear treaty requirement to that effect.

## Legal Principles

- A State’s consent to ICSID arbitration may be given in advance through a bilateral investment treaty; an investor accepts that offer by selecting ICSID arbitration in the manner the treaty allows.
- Once an investor accepts a treaty’s offer to arbitrate, mutual consent under ICSID Convention Article 25 is established for covered disputes.
- A contractual forum-selection clause providing for domestic courts does not, by itself, negate a State’s separate consent to ICSID arbitration contained in a treaty or deprive an ICSID tribunal of jurisdiction over treaty claims.
- Equity participation (shareholding) in a project company tied to a concession may qualify as an “investment” under a BIT and under ICSID Convention Article 25.
- Under ICSID Convention Article 26 and typical BIT consent clauses, local litigation or exhaustion of local remedies is not a precondition to ICSID arbitration unless the State’s consent expressly imposes that condition.

## Conclusion

The ICSID tribunal upheld jurisdiction because Argentina’s consent to arbitration in the Argentina–U.S. BIT operated as an advance offer to arbitrate investment disputes, Lanco accepted that offer by initiating ICSID proceedings, Lanco’s shareholding connected to the port-terminal concession qualified as an investment, and the concession’s forum-selection clause assigning disputes to Argentine tribunals did not bar treaty-based ICSID arbitration or require prior resort to local courts.


Lanco International, Inc. v. Argentine Republic, 40 I.L.M. 457 (1998)