Caravelí Cotaruse Transmisora de Energía S.A.C. v. Republic of Peru
ICSID · Investment (ICSID and treaty) · Peru · 15 Apr 2013
Why it matters
This case is significant for its detailed analysis of the statute of limitations (caducidad) under Peruvian law in the context of investment treaty arbitration. The Tribunal's majority decision clarified that the one-year period for claiming excessive onerosity runs from the date the obligor becomes aware of the excessive burden, and that direct negotiations do not automatically suspend the limitation period. The case also highlights the importance of procedural steps in concession contracts and the allocation of costs in ICSID arbitration.
Summary
Caravelí Cotaruse Transmisora de Energía S.A.C. (CCTE), a Peruvian company owned by Spanish investors, entered into two concession contracts with Peru in August 2008 to build and operate electricity transmission lines. CCTE claimed that due to unforeseen economic changes (increased costs and interest rates), its obligations became excessively onerous under Article 1440 of the Peruvian Civil Code. It sought modification of the tariff regime or, alternatively, rescission of the contracts and compensation. Peru argued that CCTE's right to claim excessive onerosity had expired under a one-year statute of limitations (caducidad) that began in April 2008 when interest rates peaked. The Tribunal, by majority, agreed with Peru. It found that the one-year period started when CCTE could have known of the excessive burden (April 2008) and expired in April 2009, before CCTE initiated arbitration in March 2011. The Tribunal rejected CCTE's arguments that direct negotiations suspended the limitation period, noting that the contract required direct negotiations as a precondition but did not automatically suspend caducidad. The Tribunal also dismissed CCTE's claim for damages from canceling a supply contract with APAR, as that was a unilateral business decision. Consequently, the Tribunal rejected all claims and ordered CCTE to pay Peru's costs of USD 3,097,691.82. One arbitrator dissented, arguing that CCTE's communications in December 2008 and May 2009 should have interrupted the limitation period.
The detail
Parties: Caravelí Cotaruse Transmisora de Energía S.A.C. v. Republic of Peru
Case number: ICSID Case No. ARB/11/9
Outcome: The Tribunal rejected all of Claimant's claims and ordered Claimant to pay Respondent USD 3,097,691.82 in costs.
Applicable law: Peruvian Civil Code (Article 1440 on excessive onerosity), ICSID Convention, and the Concession Contracts (Machupicchu-Cotaruse and Mantaro-Caravelí-Montalvo) governed by Peruvian law.
Issues in play: The case involved the application of the Peruvian Civil Code's doctrine of excessive onerosity (rebus sic stantibus) versus the contractual stability and tariff regime under the concession contracts. The key issue was whether the claimant's right to claim excessive onerosity had expired under the one-year statute of limitations (caducidad).
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