Source:
IFIs Latin American Monitor
Thu Aug 23 2007
Twenty-seven claims filed against Argentina are still pending at the World Bank’s International Centre for Settlement of Investment Disputes (ICSID). After the 2001 economic and financial crisis, numerous international companies resorted to this World Bank body to file claims for the alleged violation of an investment protection treaty. In 2007, more than five years after the crisis, ICSID continues to rule and receive claims on this matter.
An ICSID ruling condemning Argentina to pay 105 million dollars to the French company Vivendi was recently released. The controversy had been sparked in 1997 when the government of Tucuman withdrew the water and sewage concession granted to this company.
According to the Attorney General in charge of the Argentine defense, the Vivendi case has an “incomprehensible argumentation” and the compensation amounts “are not based on any technical report, but rather on two testimonies on record”.
A previous ruling – released at the end of July – favoured the US company LG&E, which is a minority shareholder in Gas Natural BAN, one of the gas distributors operating in Buenos Aires province. According to the resolution, the provincial government will have to pay 57.4 million dollars – a figure considerably lower than the requested compensation in the amount of 268 million dollars.
The tribunal made up of two South American (Venezuela and Brazil) and one European (Denmark) judge, concluded that the Argentine state “had violated the standards of fair and equitable treatment under the investment protection treaty”, but also admitted the serious nature of the economic crisis suffered by the country. In this context, the tribunal rejected the company’s expropriation claims regarding its assets in the country.
However, interested parties may still file a motion requesting the annulment of the arbitral award, which would further extend the process for one or two more years.
This ruling serves as antecedent for still pending claims, among them, the one filed by the majority shareholder of Gas Natural BAN, the Spanish company Gas Natural.
New claims
Recently, the Italian holding company Impregilo also resorted to ICSID. The claim filed by this company exceeds the amount of 100 million dollars and is based on the losses it suffered following Argentina’s devaluation and pesification, and on an alleged violation of the Bilateral Investment Treaty between Argentina and Italy, owing to the expropriation and restatisation of its assets.
Impregilo held a 43% stake in the concessionaire Aguas del Gran Buenos Aires, when in early 2006 governor Felipe Solá decreed the termination of contract on the grounds of poor provision of services. In view of this, the company stated that the pesification of contracts and the freezing in tariffs made it essential to review the terms of the contract in question.
Related Information:
* Is it possible to withdraw from globalisation?, by Roberto Bissio
* CSOs support Bolivia's bid to get out of the ICSID, by Food and Water Watch
* A new assertiveness for Latin American governments, by Mark Weisbrot (CEPR)
* Ecuador, elections and the IMF, by Hedelberto López Blanch
* The Bilateral Investment Treaties and the cases at ICSD: The Argentine experience at the beginning of the XXI century - (pdf format)
* Challenges posed by an Argentinian post-default scenario, by IFIs Latin American Monitor
|
