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

BOLIVIA

Bolivia and Canada’s TriMetals Mining reach settlement on treaty award in mining project

Canada’s mining company TriMetals Mining and its wholly owned subsidiaries Minera Malku Khota and South American Silver have reached a settlement with Bolivia to satisfy an investment treaty award that held the state liable for nationalising a silver mining.

The dispute was heard by an UNCITRAL tribunal that had previously issued an award concluding that Bolivia violated the expropriation standard in the UK-Bolivia bilateral investment treaty when it nationalised the Malku Khota silver mine in 2012 without paying compensation.

Under the terms of the settlement, Bolivia will pay the TriMetals companies roughly US$25.8 million, while the state will receive exploration data for the silver mine project currently owned by those companies. The settlement figure represents a discount on the full amount owed under the award.

BRAZIL

Sao Paulo State issues Bill on arbitration against public bodies

On 1 August 2019, the Official Gazette of the State of Sao Paulo published  Decree 64,356 of 31 July 2019 regarding the use of arbitration for the resolution of disputes against the public administration of the State of Sao Paulo and its agencies.

This decree establishes that arbitration must be preferably institutional, although in certain circumstance, it could be ad hoc. Also, as a general rule, an arbitral tribunal of three arbitrators must be constituted.

The Decree also provides that the arbitration clauses must establish as the place of arbitration the city of Sao Paulo, Brazilian law as the applicable law,  Portuguese as the language of the arbitration and the courts of the city of Sao Paulo as the supporting courts.

Some controversial aspects of the Decree include: (i) the requesting party of the arbitration having to pay in advance all the costs of the arbitration and, (ii) the prohibition of the principle “the losing party pays the costs.

COLOMBIA

Colombia loses first-ever treaty claim  in mining royalties dispute

An ICSID tribunal has ordered Colombia to repay a US$19 million fine it imposed on Swiss commodities trader Glencore and Glencore’s local subsidiary Prodeco in a dispute relating to a contract amendment concerning mining royalties.

The tribunal ruled that the manner in which the fine against Glencore’s local subsidiary Prodeco had been calculated was an “unreasonable measure” and a breach of fair and equitable treatment under the Switzerland-Colombia bilateral investment treaty. Colombia was ordered to repay the fine with interest.

It is believed to be the first treaty award ever issued against the state. 

Colombia was also ordered to pay over US$2 million towards Glencore’s legal expenses and the costs of the arbitration. Interest was also awarded on the damages and costs. 

MEXICO

Mexico settles several arbitrations on gas pipeline claims

Mexico has reached agreements with three natural gas pipeline operators that is expected to save the government US$4.5 billion and bring an end to several pending arbitrations concerning the cost of transporting natural gas for electricity generation launched by a state utility.

Mexican president Andrés Manuel López Obrador and the head of the state-owned Federal Electricity Commission (CFE) announced they had reached a deal with the three operators Ienova, a subsidiary of California’s Sempra Energy; Canada’s TC Energy (formerly TransCanada); and Mexico’s Grupo Carso, which is majority owned by Mexican billionaire Carlos Slim. Negotiations are still ongoing with another pipeline operator, Mexico’s Fermaca.

CFE had commenced arbitration against all four companies to amend the terms of contracts relating to seven natural gas pipelines, which it had labelled “exorbitant and unfair”. The state utility had sought to eliminate force majeure clauses and fixed capacity charges in the contracts.

CARIBBEAN

Sint Maarten Island airport gets insurance payout in Hurricane Irma claim

An UNCITRAL tribunal has awarded US$72 million in an insurance claim against Caribbean insurance group Nagico brought by PJIAE, the operator of the Princess Juliana International Airport in Sint Maarten that was damaged by Hurricane Irma.

The tribunal had awarded a principal claim, excluding interest, of more than US$71.8 million – including US$58 million that Nagico has already paid out to PJIAE in an advanced settlement.

The dispute was an ad hoc proceeding seated in Sint Maarten and governed by the 2006 UNCITRAL Model Law on International Commercial Arbitration and the UNCITRAL rules.

VENEZUELA

Uruguayan tobacco investor files treaty claim against Venezuela

Venezuela is facing a fresh ICSID claim brought by Gustavo Maeso Lando, an Uruguayan tobacco investor, under the Uruguay-Venezuela bilateral investment treaty, who says his business had shipments of cigarettes seized and its license revoked by local authorities.

The dispute relates to the alleged seizures in 2007 of shipments of cigarettes that Maeso’s Venezuelan company Racing Tobacco had been importing from Uruguay to a port at Venezuela’s Margarita Island, located off the mainland in the Caribbean Sea. 

Venezuelan authorities are understood to have confiscated the containers on the grounds that Racing Tobacco was violating a law prohibiting the sale of imported cigarettes at a price lower than those produced domestically. The authorities also revoked Racing Tobacco’s import and sales license.

Maeso alleges that corrupt Venezuelan officials had deliberately allowed him to start his venture before intercepting the shipments as contraband in an effort to defraud him.