International Arbitration Newsletter - October 2020 | Regional Overview: The Americas

ECUADOR

Ecuador faces a tax claim brought by airport investor

Canadian company Aecon Construction (Aecon), main participant in the international consortium responsible for the construction of the new international airport of Quito, has filed an UNCITRAL claim against Ecuador alleging a breach of the concession’s terms regarding tax liability exemptions.

Aecon claims that Ecuador’s breach of free zone laws results in a violation of the Canada-Ecuador bilateral investment treaty, which considers Aecon as a free trade user, even before the beginning of any of the construction works. In addition, Aecon alleges that the dispute also affects the sale of its 46% interest of the project to Colombian and Brazilian companies.

In any case, the dispute between Aecon and Ecuador regarding the airport project is not new, as both parties have ended up in several arbitrations, the latest of which concluded when the consortium agreed to discontinue ICSID proceedings after Ecuador honoured the investment agreement.

MEXICO

Mexico threatened with BIT claim by Spanish food importer

Gonzalo Mora Velarde, a Spanish investor, owner of two Mexican companies that import and sell high quality products, especially gourmet food coming from Spain, has threatened to bring an investment treaty claim against Mexico under the Spain-Mexico bilateral investment treaty.

The dispute relates to the seizure of the investor’s products upon arrival at the port of Veracruz. There, after placing a precautionary embargo over the containers in order to conduct a health and safety inspection, the Mexican customs authority seized the products and decided that these were property of the Mexican State.

Two Mexican courts later quashed the custom’s ruling ordering either the return of the products or the compensation of their value. Mr. Mora now argues that due to the fact that the goods were destroyed and no reimbursement was made, his Mexican subsidiaries were not able to fulfil their contractual obligations with their clients.

PANAMA

Panama Canal Authority wins ICC arbitration

The Panama Canal Authority (PCA), the public agency responsible for the operation and management of the Panama Canal, has recently announced the outcome of an ICC arbitration dispute against Grupo Unidos por el Canal (GUPC), the consortium in charge of the canal’s expansion, which comprises a Spanish, an Italian and a Belgian company. 

In a dispute relating to the use of certain aggregates and design of the concrete mix used in the construction, the ICC tribunal, seated in Miami, awarded a repayment of US$ 265 million in favour of the PCA. The tribunal also awarded GUPC US$ 25 million in relation to financing and indirect costs of the project, a compensation to be paid by the PCA.

UNITED STATES

US court denies discovery in aid of foreign arbitration

The US Court of Appeals for the Seventh Circuit denied a petition for discovery in order to be use in an arbitration taking place in the UK. The denial is based on the interpretation of section 1782 of the United States Code, which permits US courts to grant discovery in aid of foreign or international tribunals, as long as they are considered state tribunals.

This discovery was requested by electronics supplier Servotronics in order to obtain evidence from Boeing to be used in an arbitration against British engineering company Rolls-Royce under the rules of the Chartered Institute of Arbitrators.