International Arbitration Newsletter - October 2018 | Regional Overview: The Americas

BRAZIL

Arbitration on the rise in Brazil

According to a recent study published by Professor Selma Lemes, arbitration as a means of dispute settlement has experienced a noticeable increase in the last two years.

While in the early 2010´s, the average case load amounted roughly 130 cases per year, this average case load has more than doubled rising up to 300 cases per year in the last two years.

Likewise, the amounts in dispute have equally increased significantly from a total aggregate value of 11,000 million reales (approximately 2,500 million euros) in 2015 to 25,000 million reales (approximately 5,400 million euros) in the years 2016 and 2017.

COSTA RICA

US real estate investors loose UNCITRAL Treaty claim against Costa Rica

An UNCITRAL tribunal has dismissed a US$100 million claim brought by David Aven and six other US nationals under the Dominican Republic-Central America free trade agreement against Costa Rica after finding that measures taken by state authorities to protect wetlands and forests were not arbitrary or in breach of domestic or international law.

The tribunal also rejected Costa Rica’s counterclaim for environmental damage, though it found that it could have jurisdiction to hear counterclaims by states against investors for breaching environmental and other obligations under the trade agreement.

ECUADOR

Ecuadorean judgment against CHEVRON denied by UNCITRAL tribunal

In a partial award a tribunal in an UNCITRAL arbitration administered by the Permanent Court of Arbitration in The Hague has ruled that a US$9.5 billion Ecuadorean court judgment that held Chevron liable for environmental contamination in the Amazon was procured through fraud and violated Ecuador’s obligations under international law.

The award held that the judgment was “corruptly” ghostwritten for the presiding judge by one or more of the representatives of the plaintiffs in the litigation in return for the promise of a bribe, and the tribunal unanimously upheld claims by Chevron and its subsidiary Texaco Petroleum that Ecuador committed a denial of justice under customary international law and the US-Ecuador bilateral investment treaty.

Ecuador has confirmed that it will file an application to annul the UNCITRAL investment treaty award in the Dutch courts.

GUATEMALA

APM Terminals threatens Guatemala with ICSID treaty claim on terminal dispute

The Spanish subsidiary of Maersk´s Group logistics arm, APM Terminals, has filed a notice of dispute before ICSID against Guatemala under the Spain-Guatemala bilateral investment treaty after a local court stripped it of its right to operate a major port terminal.The dispute relates to Terminal de Contenedores Quetzal (TCQ), a major container terminal at the port of Quetzal on the country’s Pacific coast. While damages are yet to be quantified, the claim is likely to exceed US$200 million and follows a scandal over bribes allegedly paid by the concession’s previous owner.The notice of dispute triggers a six-month cooling-off period before an arbitration can be filed.

MEXICO

Abengoa hit by ICSID award enforcement by Mexican investors before NY court

On 31 August 2018, two Mexican companies jointly owned by Goldman Sachs Infrastructure Partners and Grupo Bursatil Mexicano brought an application against Spanish energy giant Abengoa in the US District Court of the Southern District of New York to enforce an ICDR award obtained against a subsidiary of theSpanish energy company.

The award was obtained after defeating claims relating to a wind farm project in north-eastern Mexico and being granted part of a counterclaim of US$11.4 million in liquidated damages and US$3.2 million arbitration costs, plus post-award interest and lawyers’ fees and costs based on a fee-shifting agreement between the parties.

PERU

SIC Power threatens Peru with treaty claim

Singapore-registered affiliate IC Power, which is ultimately owned by London-based Israeli businessman Idan Ofer, has threatened Peru with a potential claim of more than US$150 million, submitting a notice of dispute under the 2009 Singapore-Peru free trade agreement.

The potential claim against Peru relates to the treatment of Kallpa Generación, a Peruvian electricity generation company also previously owned by IC Power before its sale to I Squared. According to the claimant, a series of changes made by Peru’s mining and energy regulator Osinergmin benefited Peru’s state-owned electricity company Electroperu and caused detriment to IC Power and its subsidiaries.

PANAMA

Sacyr files new treaty claim against Panama over Canal dispute

Spanish construction group Sacyr has filed before UNCITRAL an investment treaty claim against Panama brought under the Spain-Panama bilateral investment treaty in a dispute over the expansion of the Panama Canal that has already triggered a series of ICC arbitrations worth a combined US$5.8 billion.

Sacyr, as part of Grupo Unidos de la Canal (GUPC), a consortium including Italy’s Salini Impregilo, Belgium’s Jan de Nul and Panama’s Urbana, won a contract in 2009 to design and construct a third set of locks on the Panama Canal. The costs of the project have significantly exceeded the US$3 billion originally earmarked for it, giving rise to a series of disputes between GUPC and the Panama Canal Authority that have led to adjudication board proceedings and seven ICC arbitrations seated in Miami.

In addition, consortium partner Salini has also threatened to bring a claim against Panama under the Italy-Panama BIT.

USA

Devas Multimedia seeks to enforce satellite dispute award in Washington

Indian telecoms company Devas Multimedia has applied to the US District Court for the Western District of Washington to enforce a 2015 ICC award worth US$672 million against Indian government-owned satellite company Antrix over a terminated telecoms deal.

Devas claims that Antrix has failed to pay any part of the award to date, despite the award having been already confirmed by the courts in France and the UK after Devas filed ex parte applications for enforcement in 2016.

The dispute relates to a lease agreement for 70 megahertz of the S-band spectrum following the launch of two space satellites, which Antrix cancelled on grounds of force majeure, arguing that government policy had changed to prohibit the allocation of S-band spectrum to entities unconnected to the Indian space programme.

EL SALVADOR

El Salvador threatened by claim from businessman Jose Enrique Rais-Lopez

El Salvador has been threatened with  a claim either under the bilateral investment treaty between Switzerland and El Salvador or under the Dominican Republic-Central American Free Trade Agreement by fugitive Salvadorian businessman Jose Enrique Rais López to protect him from alleged political persecution.The potential claim relates to an arrest warrant filed against Jose Enrique Rais-Lopez, who owns several companies in El Salvador and has been a fugitive from the country since January 2017, when he fled to avoid a trial for allegedly attempting to defraud the justice department.