International Arbitration Newsletter - April 2019 | Regional Overview: The Americas

Bolivia

UNCITRAL case against Bolivia continues before PCA despite claimant´s death

An UNCITRAL case in a dispute filed by US national Julio Miguel Orlandini Agreda and Bolivian Compañía Minera Orlandini (CMO) against Bolivia concerning mining concessions is underway at the Permanent Court of Arbitration (PCA) in The Hague despite the death of Orlandini.

The dispute concerns various mining concessions held by CMO in the municipality of Antequera in western Bolivia. The claimants allege that state-owned entity Comibol conducted illegal mining activities within their concession area and was granted subsequent concessions that partly overlapped with their own mining rights. They say Bolivian authorities ultimately dispossessed them of their concessions and property.

The first procedural order records that the legal representative of Orlandini’s estate must ratify any actions taken so far in the arbitration by CMO.

Ecuador

Consortium lead by Repsol withdraws pipeline claim against Ecuador

Spanish oil giant Repsol and other companies such as China’s Andes Petroleum and Sinopec, Brazil’s Petrobras, Italy’s Eni, Perenco and Occidental, forming the Oleoducto de Crudos Pesados (OCP) consortium that operates a major crude oil pipeline in Ecuador have withdrawn an UNCITRAL claim before the Permanent Court of Arbitration in The Hague worth $470 million against Ecuador following Ecuador’s adoption of a 2018 law on investment and fiscal stability. 

The dispute related to OCP´s concession contract to build a 485-kilometre pipeline from the Amazon to the Pacific coast and Ecuador’s Internal Revenue Service (SRI) seven separate tax claims brought against the consortium, which according to OCP had violated provisions in their 2001 investment contract relating to legal stability; expropriation without compensation; guarantees of free remission of capital, utilities and other payments abroad; fair and equitable treatment; and the right to due process. 

Mexico

Mexico faces claim from ocean exploring company

US deep-ocean exploration company Odyssey Marine Exploration has filed a notice of intent under NAFTA against Mexico in a $3.54 billion claim after it was refused an environmental permit to develop a seabed phosphate deposit located 22 kilometres off the coast of Mexico’s western state of Baja California Sur. In 2012, the Mexican government awarded Odyssey’s local subsidiary Exploraciones Oceanicas (ExO) a 50-year mining concession for the deposit, extending over 3,000 square kilometres. Odyssey has said the deposit could supply most of North America's fertiliser needs for the next 100 years.

According to Odyssey, ExO spent four years developing an environmental impact assessment and development plan showing the project would have no long-term or short-term negative effects on the local marine environment, but, despite this, the ministry denied approval for the project in 2016. Odyssey says the grounds for the refusal were “spurious” and that in the same period the ministry granted Mexican companies and state agencies approval for major dredging projects in far more ecologically sensitive areas.

Panama

Panama faces ICSID claim from Enel

Panama-registered Enel Fortuna, A subsidiary of Italian renewable energy company Enel has lodged an ICSID claim against Panama under the 2009 Panama-Italy bilateral investment treaty worth around €11 million over the state’s alleged failure to compensate it for commercial damage caused by delay in the construction of an electricity transmission line.

Enel Fortuna, which is 49.9% owned by the Panamanian state, owns and operates the 300-megawatt Fortuna hydropower plant in the western province of Chiriquí. The plant reportedly accounts for 30% of the country’s electricity supply.

The dispute relates to a 2014 agreement in which the Panamanian government under former President Ricardo Martinelli agreed to compensate Enel Fortuna for electricity it had generated but been unable to sell because of a lack of transmission infrastructure.

Uruguay

ICC tribunal holds Uruguay liable in Petrobras´ concession dispute

An ICC tribunal has granted declaratory relief in favour of Conecta, a subsidiary of Brazil’s state-owned energy company Petrobras against Uruguay in a dispute over the rising cost of gas imports.

The tribunal found that Uruguay had a duty to restore the economic and financial balance of its concession agreement with Conecta for the distribution of natural gas in the country; and an obligation to negotiate in good faith the adjustments required to bring about that rebalancing.

However, the tribunal rejected all other claims, including Conecta’s arguments that Uruguay had committed “serious and repeated” breaches of the concession agreement, and ordered each party to bear its own costs.

The dispute relates to the repercussions of the Argentine energy crisis of 2004, where a national energy shortage led the Argentine government to impose a restriction on gas exports to preserve the supply for internal consumption.

ICSID tribunal declines jurisdiction over a $65 million claim against Uruguay

An ICSID tribunal has declined jurisdiction over a $65 million claim against Uruguay, finding that the US claimant had failed to prove it owned or controlled a local company that had its wireless spectrum licence revoked.

The tribunal unanimously dismissed the claim brought by Florida company Italba under the US-Uruguay bilateral investment treaty and ordered it to pay $5.9 million towards the state’s costs.

The dispute relates to Italba´s purported investment in Trigosul, a Uruguayan telecoms company that had its wireless spectrum licence revoked in 2011 after a regulatory agency found it was failing to operate within the licence terms.

While Trigosul successfully challenged this decision in an administrative court, the regulator allegedly refused to reinstate the licence and transferred the company’s rights to a competitor.

Venezuela

US oil company ConocoPhillips wins oil dispute against Venezuela

An ICSID tribunal has awarded US oil company ConocoPhillips nearly US$9 billion plus interest against Venezuela over the expropriation of oil assets in the Orinoco Belt.

The US company and its Dutch subsidiaries filed the ICSID claim in 2007, seeking US$30 billion in compensation for measures culminating in the nationalisation of the Petrozuata and Hamaca heavy crude oil projects in the Orinoco Belt and the offshore Corocoro project.

Last year, Conoco also won an  ICC award against Venezuela’s national oil and gas company PDVSA relating to same projects. The latest ICSID award declares that Conoco is under an obligation based on the principle of good faith not to seek double recovery when seeking enforcement of the ICSID award beyond the amounts awarded by the ICC tribunal.