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

CHILE

CORFO and Albermale to face each other in lithium exploitation arbitration

After failed settlement negotiations, Chile´s Economic Development Agency (CORFO) and Albermale, a United States company which exploits lithium and other minerals in Salar de Atacama in Chile, are to face each other in an ICC international arbitration.

This long running dispute concerns the contract that entitles Albermale to exploit the aforementioned resources, and particularly a clause relating to the payment of commissions on the sales of the minerals. CORFO is claiming more than US$ 11 million by way of damages suffered as a result of Albemarle’s alleged failure to pay the due commissions.

COSTA RICA

Telecom investor files claim against Costa Rica

Venezuelan telecom investor, José Alejandro Hernández Contreras, is claiming US$ 25 million from Cost Rica in an ICSID arbitration under the Costa Rica-Venezuela BIT for the alleged expropriation of his mobile phone distribution company, V-Net.

V-Net distributed the state-owned Kolbi’s mobile phones and other products, by virtue of an exclusive distribution contract awarded to it by the Costa Rican Institute of Electricity (ICE) in 2017.

Hernández alleges that in 2018 the ICE began to fine V-Net on diverse “arbitrary” charges not to renew the exclusive distribution contract, which ended up with the ICE handing the contract to another distributor that benefited from the investor´s logistical and operational team. The investor also alleges that corruption in the ICE may have influenced the termination of the contract.

PANAMA

US constructor files ICSID investment treaty claim against Panama

US construction group, IBT Group has filed a second arbitration before ICSID against Panama under the US-Panama Trade Promotion Agreement (TPA).

In 2014 IBT commenced arbitration against Panama claiming US$ 50 million under the US-Panama BIT in relation to a concession to rehabilitate four plants that manufactured asphalt. Panama unilaterally decided to terminate the contract due to a disagreement between IBT and the country´s Ministry of Public Works. The arbitration was nonetheless discontinued, since both the parties seemingly reached a settlement.

IBT has also previously commenced two ICC arbitrations against Panama in connection with the construction of a number of health centres. These were also settled subsequently.

The details of the latest arbitration are yet unknown, but it is not thought to be related to any of the earlier disputes.

UNITED STATES

Ponzi scheme victims bring investment treaty claims against the US

Investors who were victims of a Ponzi scheme, are proceeding with claims valued at over US$ 511 million against the US, under several investment treaties, arguing the breach of investment protection standards by the government for failing to end the Ponzi scheme sooner.

Mexican and Canadian investors are pursuing a NAFTA arbitration and others are claiming under the US-Chilean BIT and the Dominican Republic-Central America free trade agreement.

In the NAFTA arbitration, where the claimants are said to be victims of a US$ 7 billion fraud carried out by the Stanford Financial Group, it is alleged that there was a failure of the Dallas branch of the US Security and Exchange Commission (SEC) to stop the Ponzi scheme, although they had had knowledge of it for seven years.