International Arbitration Newsletter - May 2021 | Regional Overview: The Americas

COLOMBIA

ICSID dismisses claim by America Movil (Claro) against the Colombian government

An ICSID arbitration panel has rendered an award dismissing the claim filed by America Movil, parent company of Comcel and one of the biggest players in the telecommunications sector in Latin America, against the Colombian government. The Mexican company filed the claim in October 2016, requesting a US$ 1.286 million payment for compensation of damages.

America Movil had accused the Colombian government of not complying with certain conditions of the Mexico-Colombia Free Trade Agreement, claiming that it had suffered an expropriation of their investment due to the refusal of the government to recognize Comcel’s property rights after the government reverted control of some telecom assets upon the termination of a concession agreement.

The tribunal concluded that an arbitration proceeding was not the appropriate means to dismiss a national court decision, such as the ruling C-555 of 2013 of the Colombian Constitutional Court and a previous domestic arbitration award. Moreover, the tribunal held that at the time of the events there was no regulation regarding the right of Comcel to non-revert its property to Colombia. Therefore, the right to revert the property to government control was not an expropriation by the Colombian government of the claimants’ investment. The claimants were ordered to pay the costs of the proceedings and legal fees incurred by the respondent, bringing the total amount of costs payable by the claimants to close to US$ 2.2 million.

The effective and dominant nationality of the claimants leads PCA tribunal to decline jurisdiction

A Permanent Court of Arbitration (PCA) tribunal has dismissed the claim filed by Alberto, Enrique and Felipe Carrizosa Gelzis, shareholders of Granahorrar. The three brothers filed the claim in 2018, requesting US$ 323 million as compensation for the damages caused by the intervention measures of the Banking Superintendency of Colombia and FOGAFIN related to the capitalization of Granahorrar, which reduced the shares’ value. The claimants also challenged the Constitutional Court rulings from 2011 and 2014 about this matter.

In the award, the tribunal accepted the case presented by the Colombian government arguing that although the claimants had American nationality, the effective and dominant nationality of the Carrizosa brothers was in fact Colombian. Therefore, the tribunal declined jurisdiction over the case, because this was a family of Colombian nationals suing its own State, the claimants were ordered to pay US$ 1.8 million for the costs of the proceeding and legal fees incurred by the respondent.

CHILE

Potential claims by insurance companies regarding the Chilean COVID-19 regulation on the withdrawal of life annuities

Prior to a potential ICSID arbitration, international insurance companies are considering to negotiate with the Chilean State in order to settle the situation created by the COVID-19 Chilean regulation recently approved, which allows individual beneficiaries of life annuities to withdraw part of their pension funds. International insurance companies have categorized this measure as an expropriation, which would infringe international investment treaties or the Free Trade Treaties executed between their countries and Chile.

The Chilean State settles conflict with Albemarle over disclosure of data regarding lithium reserves

US-based lithium company Albemarle obtained in 2016 an authorization from Chile in order to increase its lithium production in Atacama’s salt flat, but only if the company could prove that the reserves could hold such an increase. After Albemarle presented in 2019 a report describing its lithium reserves, Chilean Nuclear Agency, CChEN, required further details, which Albemarle refused to deliver alluding to US financial market regulations.

This led to a dispute with the agency that put Albemarle under the risk of having its export’s license suspended. However, the government agency has recently declared that, after thoroughly studying new information delivered by Albemarle, the report was satisfactory, putting an end to the conflict that otherwise would have ended up in an international arbitration.

This settlement puts an end to one of the three disputes that Albemarle has had with Chilean authorities. One of them resulted in an ICC claim presented by Chilean Agency Corfo related to an alleged underpayment of royalties, and the other one in a domestic lawsuit that Albemarle has filed against that same agency asserting an unfair unjust discrimination against the said company.

MEXICO

American oil and gas investors file ICSID arbitration against Mexico

Finely Resources, MWS Management and Prize Permanent Holdings have filed an ICSID arbitration claim under the North American Free Trade Agreement (NAFTA) against the Mexican State in protection of their investments in Mexico's upstream hydrocarbons sector.

This expected claim follows the publication of the recent reform promoted by President Andrés Manuel López Obrador to the Hydrocarbons Law with the aim of strengthening the Mexican State's productive companies by disincentivising various practices related to the illicit trade of hydrocarbons and petroleum products and the reorganisation of various economic activities in the energy sector.

This claim follows the claim filed before ICSID under NAFTA by the Canadian mining company First Majestic Silver, against the Mexican State, with an approximate value of US$ 500 million for the retroactive determination of tax credits.

PERU

First Peruvian arbitrator appointed to CAS

The Court of Arbitration for Sport (CAS) has recently added Peruvian arbitrator and consultant Carlos Matheus to its Panel of Arbitrators. This is the first time that a Peruvian has been added to the CAS List of Arbitrators.