Amec Foster Wheeler USA Corporation, Process Consultants, Inc., and Joint Venture Foster Wheeler USA Corporation and Process Consultants, Inc. v. Republic of Colombia
ICSID · Investment (ICSID and treaty) · Colombia · 19 Dec 2024
Why it matters
This award is significant because it is one of the first decisions under the US-Colombia TPA to address the preliminary objection procedure under Article 10.20.4. The Tribunal's ruling that the claims were inadmissible due to failure to comply with the Treaty's procedural requirements reinforces the importance of strict adherence to notice and waiver provisions in investment treaties. It also clarifies the scope of the Tribunal's powers and the standard for manifest lack of legal merit.
Summary
The case arose from a dispute over a contract for the construction and expansion of a Colombian oil refinery. Claimants, US companies, initiated ICSID arbitration under the US-Colombia TPA, alleging that Colombia breached its obligations. Colombia filed a preliminary objection under Article 10.20.4 of the Treaty, arguing that the claims were manifestly without legal merit because Claimants had not complied with the Treaty's requirements for consent to arbitration (Article 10.16.1) and that the claims fell outside the Tribunal's powers (Article 10.26). The Tribunal bifurcated the proceedings to address jurisdiction first. After extensive submissions and a hearing, the Tribunal upheld Colombia's objection. It found that Claimants had not validly waived their right to initiate or continue local proceedings as required by Article 10.16.2(b), and that the claims were therefore inadmissible. The Tribunal also rejected Claimants' arguments that the waiver was valid and that they had not definitively elected to submit their claim to Colombian courts. Consequently, the Tribunal terminated the arbitration and ordered Claimants to bear the costs of the proceedings, including Respondent's legal fees. The decision underscores the importance of procedural compliance in investment treaty arbitration.
The detail
Parties: Amec Foster Wheeler USA Corporation, Process Consultants, Inc., and Joint Venture Foster Wheeler USA Corporation and Process Consultants, Inc. v. Republic of Colombia
Case number: ICSID Case No. ARB/19/34
Outcome: The Tribunal admitted Respondent's preliminary objection, declared Claimants' claims inadmissible, terminated the arbitration, and ordered Claimants to pay Respondent US$ 330,528.39 in arbitration costs and US$ 1,225,326 in legal costs.
Quantum: US$ 1,555,854.39 (total costs awarded to Respondent)
Applicable law: U.S.-Colombia Trade Promotion Agreement (Treaty), ICSID Convention, ICSID Arbitration Rules (2006)
Issues in play: The case involved the interpretation of Article 10.20.4 of the US-Colombia TPA, which allows a respondent to object that a claim is manifestly without legal merit. The Tribunal considered whether Claimants' claims were inadmissible because they failed to meet the requirements of Article 10.16.1 (consent to arbitration) and fell outside the Tribunal's powers under Article 10.26.
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