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

ARGENTINA

ICSID annulment committee confirms award against Argentina on water dispute

An ICSID annulment committee has upheld a US$226 million award in favour of European water and waste management investors Suez, Socieded General de Aguas de Barcelona and Interagua Servicos Integrales de Agua against Argentina, including earlier decisions on jurisdiction and liability and a subsequent decision on rectification that increased the damages. The committee rejected, among other things, allegations that the original tribunal had been improperly constituted, had manifestly exceeded its powers, had departed from a fundamental rule of procedure and had failed to state its reasons in the award.

GUATEMALA

Guatemala hit by new ICSID claim on mining dispute

Dominican investor Daniel Kappes and his company Kappes Cassiday & Associates (KSA) have filed a claim under the Dominican Republic-Central America Free Trade Agreement (DR-CAFTA) before ICSID seeking more than US$350 million in damages from Guatemala for suspending operations at various gold and silver mines.  

The dispute relates to Kappes’ acquisition of Exmingua – a Guatemalan company that holds an exploitation licence to develop and operate a gold and silver mining project known as “El Tambor” or "Progreso VII". According to claimants, before the acquisition of Exmingua, they consulted on planned activities with local communities and participated in various outreach projects – as required by the 1989 Indigenous and Tribal Peoples Convention, a treaty drawn up under the auspices of the UN International Labour Organization that Guatemala ratified in 1996. Exmingua’s environmental impact assessment was approved without opposition, they say.However, shortly after production began in 2014 protests broke out at Exmingua's mines, with representatives of local communities and non-governmental organisations forming blockades to prevent access. Kappes and KCA claim that they are being punished even though the alleged failure to conduct consultations on its mining projects was “solely attributable to the state”. They say Guatemala has disregarded their legitimate expectations, failed to afford full protection and security to their investments and effectively expropriated Exmingua’s business.

MEXICO

Mexico faced with Treaty claim of Singaporean marine services provider

An UNCITRAL tribunal is in place to hear a treaty claim brought by Singaporean marine services provider PACC Offshore Services Holdings (PACC Offshore)against Mexico under the 2009 Singapore-Mexico bilateral investment treaty. PACC Offshore launched the claim over the state’s seizure of certain vessels leased by its subsidiary to Mexican company Oceanografía, a provider of offshore oil services to Mexico’s national oil and gas company, Pemex. Oceanografía was accused of fraud in 2014 after obtaining US$400 million in cash advances from a Citigroup subsidiary through falsified invoices for services to Pemex. PACC says that during Mexican authorities’ investigation of the matter, all of its subsidiary’s vessels were impounded for a number of months. PACC alleges that the Mexican authorities’ actions stopped its subsidiary being able to lease its ships to Pemex and destroyed those investments.

Mexico sees new NAFTA claim on limestone quarry

Two subsidiaries of a US construction materials company Vulcan Materials have recently filed a NAFTA claim against Mexico over alleged discriminatory measures that harmed its investment in a limestone quarry.Legacy Vulcan and Calizas Industriales del Carmen (Calica) served a notice of dispute on the Mexican government in October 2018, shortly before a newly negotiated replacement for the 25-year-old NAFTA, the United States-Mexico-Canada Agreement or USMCA, was unveiled.

The dispute relates to an investment of a limestone quarry on the coast of the Mexican state of Quintana. Vulcan alleges,amongst other matters, that since 2008 the Quintana Roo government has imposed a tax on extraction of limestone in violation of the law and fiscal regulations and substantially increased the amount that Calica is required to pay to exploit the concession on the basis of a report that contains “grave methodological defects”.

PANAMA

ICC tribunal issues second award in favour of Panama Channel authority

An ICC tribunal has ordered the consortium working on a project to expand the Panama Canal, the contractor Grupo Unidos por el Canal (GUPC), to reimburse US$847 million in advances paid by the Panama Canal Authority, plus US$13 million in interest for the late payment of an initial advance.

However, leading consortium member, Spanish engineering group Sacyr, says that the canal authority was also ordered to release US$36 million of money it had withheld to pay for maintenance of the canal.

This is the second award in favour of the state entity in one of the numerous cases filed over the project.

PERU

Peru hit with a new ICSID Treaty claim on hydroelectric power plants

On 28 December 2018 ICSID registered a claim filed by five six Peruvian subsidiaries of global construction consortium IBT Group against Peru.

The contractual claim relates to a contract to build six small hydroelectric power plants in a mountainous region of Peru in 2014, which were scheduled to come into operation by the start of this year. The project, which has proved controversial in Peru because of its potential to cause water shortages, was reportedly worth around US$140 million.

The Hydrika subsidiaries called Hydrika 1, 2, 3, 4, 5 and 6, allege that Peru unreasonably delayed providing necessary permits and approvals for the work on the plants to proceed, making their completion within the agreed time impossible. They also say their request for a schedule modification was rejected by the Peruvian government.

USA

US court denies Petrobras´ testimony request of dissenting arbitrator to set aside award

The US District Court for the Southern District of Texas has ruled there was no cause to justify obtaining, amongst other things, deposition testimony from a dissenting arbitratior, as it would just lead to more discovery in the enforcement proceedings, filed by award creditor Vantage Drilling International.

Petrobras made the applications in support of its bid to vacate a majority award in favour of Cayman company, Vantage Drilling International.

In the original Houston-seated arbitration  the tribunal chair and Vantage’s appointee formed a majority in holding Petrobras liable for the wrongful termination of a drilling services contract. They rejected its defence that the contract had been procured through bribery.