White & Case LLP - News - Victory for the Republic of Peru in Energy Dispute at World Bank

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Victory for the Republic of Peru in Energy Dispute at World Bank

Washington, DC, December 17, 2008 ... An international arbitration tribunal ruled unanimously in favor of the Republic of Peru in a US$150 million energy dispute arising under a legal stability agreement before the International Centre for Settlement of Investment Disputes (ICSID) in Washington, DC. Global law firm White & Case LLP represented Peru.

The dispute centered on a claim by Aguaytia Energy, LLC, a US company, regarding an investment it made in an integrated energy project in Peru that involved natural gas extraction and electricity generation and transmission pursuant to certain government concessions.

A decade later, Aguaytia commenced ICSID arbitration against Peru, seeking initial damages of US$140 million but ultimately as high as US$150 million. Aguaytia alleged discriminatory treatment by Peru regarding the company's electricity transmission concession vis-à-vis an unrelated Build-Own-Operate-Transfer (BOOT) contract granted by Peru some years later to a different foreign investor pursuant to an international public bid.

Aguaytia premised its claim on a 1996 Legal Stability Agreement between Aguaytia and a Peruvian state agency. The agreement provided for the stability of certain laws relating to, among others, taxation, free remittance of profits, exchange rates and the right to nondiscrimination. Aguaytia argued that the stability of the right to nondiscrimination constituted a substantive right against nondiscrimination. The tribunal disagreed.

Partner Jonathan C. Hamilton, who led White & Case's defense of the Republic of Peru, said: "The award is a complete victory for Peru and makes an important contribution to the understanding of stability agreements as a tool for the promotion and protection of foreign investment."

In its award, the tribunal agreed with Peru that the stability agreement stabilized specified laws by freezing them with respect to the signatory investor for a period of 10 years – an important benefit to investors. The tribunal concluded that a guarantee of the "stability of the right to non-discrimination" did not constitute a substantive right against nondiscrimination or a promise of "most favored investor" treatment. The tribunal made no finding of discrimination by Peru.

Added Hamilton: "The case also shows that under the right circumstances, investment arbitration cases can proceed expeditiously. The parties completed all pleadings and hearings in 14 months, and the tribunal issued the award in favor of Peru less than five months later."

White & Case fielded a bilingual team that included, in addition to Hamilton, partners Carolyn B. Lamm, Abby Cohen Smutny and Francis A. Vasquez, Jr. Estudio Echecopar in Lima acted as co-counsel.

The case is Aguaytia Energy, LLC v. Republic of Peru (ICSID Case No. ARB/06/13). It was decided by a three-member tribunal that included Robert Briner of Switzerland (president), J. William Rowley of Canada and Claus von Wobeser of Mexico.

White & Case is a leader in Latin American arbitration and investment disputes. Its global Arbitration Practice successfully advised a decade ago on the first ICSID case registered against a Latin American state and, over the past year, has won disputes before ICSID related to Bulgaria, Peru, the Philippines and Turkey. The practice has arbitration centers in Frankfurt, Hong Kong, London, New York, Paris, Stockholm and Washington, DC, with significant practices in Brussels, Mexico City, Miami, Moscow, Prague and Tokyo. The group was named "International Arbitration Team of the Year" at the Chambers USA Awards 2007 and has been ranked at the top of its field by Chambers USA, Chambers Global, Global Arbitration Review, Legal 500, American Lawyer, International Who's Who of Commercial Arbitration and Benchmark: The Definitive Guide to America's Leading Lawyers.

About White & Case
White & Case LLP is a leading global law firm with more than 2,400 lawyers in 36 offices in 24 countries. Our clients value the breadth and depth of our US, English and local law capabilities and rely on us for their complex cross-border commercial and financial transactions and for international arbitration and litigation. Whether in established or emerging markets, the hallmark of White & Case is our complete dedication to the business priorities and legal needs of our clients.

Contact:
Francine Minadeo
Media Relations Manager
White & Case LLP
646 885 2218
fminadeo@whitecase.com

	Press Releases
Expertise Canada International Arbitration Latin America Lawyers Jonathan C. Hamilton Carolyn B. Lamm Abby Cohen Smutny Francis A. Vasquez Jr. Locations Washington, DC	Victory for the Republic of Peru in Energy Dispute at World Bank Washington, DC, December 17, 2008 ... An international arbitration tribunal ruled unanimously in favor of the Republic of Peru in a US$150 million energy dispute arising under a legal stability agreement before the International Centre for Settlement of Investment Disputes (ICSID) in Washington, DC. Global law firm White & Case LLP represented Peru. The dispute centered on a claim by Aguaytia Energy, LLC, a US company, regarding an investment it made in an integrated energy project in Peru that involved natural gas extraction and electricity generation and transmission pursuant to certain government concessions. A decade later, Aguaytia commenced ICSID arbitration against Peru, seeking initial damages of US$140 million but ultimately as high as US$150 million. Aguaytia alleged discriminatory treatment by Peru regarding the company's electricity transmission concession vis-à-vis an unrelated Build-Own-Operate-Transfer (BOOT) contract granted by Peru some years later to a different foreign investor pursuant to an international public bid. Aguaytia premised its claim on a 1996 Legal Stability Agreement between Aguaytia and a Peruvian state agency. The agreement provided for the stability of certain laws relating to, among others, taxation, free remittance of profits, exchange rates and the right to nondiscrimination. Aguaytia argued that the stability of the right to nondiscrimination constituted a substantive right against nondiscrimination. The tribunal disagreed. Partner Jonathan C. Hamilton, who led White & Case's defense of the Republic of Peru, said: "The award is a complete victory for Peru and makes an important contribution to the understanding of stability agreements as a tool for the promotion and protection of foreign investment." In its award, the tribunal agreed with Peru that the stability agreement stabilized specified laws by freezing them with respect to the signatory investor for a period of 10 years – an important benefit to investors. The tribunal concluded that a guarantee of the "stability of the right to non-discrimination" did not constitute a substantive right against nondiscrimination or a promise of "most favored investor" treatment. The tribunal made no finding of discrimination by Peru. Added Hamilton: "The case also shows that under the right circumstances, investment arbitration cases can proceed expeditiously. The parties completed all pleadings and hearings in 14 months, and the tribunal issued the award in favor of Peru less than five months later." White & Case fielded a bilingual team that included, in addition to Hamilton, partners Carolyn B. Lamm, Abby Cohen Smutny and Francis A. Vasquez, Jr. Estudio Echecopar in Lima acted as co-counsel. The case is Aguaytia Energy, LLC v. Republic of Peru (ICSID Case No. ARB/06/13). It was decided by a three-member tribunal that included Robert Briner of Switzerland (president), J. William Rowley of Canada and Claus von Wobeser of Mexico. White & Case is a leader in Latin American arbitration and investment disputes. Its global Arbitration Practice successfully advised a decade ago on the first ICSID case registered against a Latin American state and, over the past year, has won disputes before ICSID related to Bulgaria, Peru, the Philippines and Turkey. The practice has arbitration centers in Frankfurt, Hong Kong, London, New York, Paris, Stockholm and Washington, DC, with significant practices in Brussels, Mexico City, Miami, Moscow, Prague and Tokyo. The group was named "International Arbitration Team of the Year" at the Chambers USA Awards 2007 and has been ranked at the top of its field by Chambers USA, Chambers Global, Global Arbitration Review, Legal 500, American Lawyer, International Who's Who of Commercial Arbitration and Benchmark: The Definitive Guide to America's Leading Lawyers. About White & Case White & Case LLP is a leading global law firm with more than 2,400 lawyers in 36 offices in 24 countries. Our clients value the breadth and depth of our US, English and local law capabilities and rely on us for their complex cross-border commercial and financial transactions and for international arbitration and litigation. Whether in established or emerging markets, the hallmark of White & Case is our complete dedication to the business priorities and legal needs of our clients. Contact: Francine Minadeo Media Relations Manager White & Case LLP 646 885 2218 fminadeo@whitecase.com