Convial Callao S.A. and CCI - Compañía de Concesiones de Infraestructura S.A. v. Republic of Peru
ICSID · Investment (ICSID and treaty) · Peru · 21 May 2013
Why it matters
This case is notable for its detailed analysis of the fair and equitable treatment standard in the context of a concession contract, and for its rejection of claims based on alleged political interference and discriminatory treatment. The Tribunal's decision on costs, where it ordered the losing claimants to pay only half of the respondent's costs due to the respondent's unsuccessful jurisdictional objections, provides guidance on cost allocation in ICSID arbitration.
Summary
The dispute arose from a concession contract for the design, construction, operation, and maintenance of the 'Vía Expresa del Callao' in Peru, granted by the Provincial Municipality of Callao to Convial Callao S.A. and CCI - Compañía de Concesiones de Infraestructura S.A. (the Claimants). The Claimants alleged that Peru, through various acts of its municipalities and congress, violated the Peru-Argentina BIT by expropriating their investment, failing to provide fair and equitable treatment, full protection and security, and discriminating against them. Specifically, they claimed that the Municipality of Callao declared the concession void due to alleged irregularities, and that a congressional commission's report and subsequent actions amounted to a taking. The Tribunal first upheld its jurisdiction, rejecting Peru's objections that the investment was invalid and that the claims were purely contractual. On the merits, the Tribunal found no expropriation because the Claimants retained ownership and control of the concession until its termination by mutual agreement, and the alleged acts did not substantially deprive them of the investment's value. Regarding fair and equitable treatment, the Tribunal held that Peru did not breach its obligation because the Claimants' legitimate expectations were not frustrated; the concession contract was terminated due to the Claimants' own breaches, and the congressional report did not cause the termination. The Tribunal also rejected claims for full protection and security, finding no failure by Peru to protect the investment from physical harm or legal interference. The discrimination claim failed because the Claimants did not prove they were in a similar situation to the alleged comparator (Lima Airport Partners). Consequently, all claims were dismissed, and the Tribunal ordered the Claimants to pay half of Peru's arbitration costs, totaling USD 2,117,489.27.
The detail
Parties: Convial Callao S.A. and CCI - Compañía de Concesiones de Infraestructura S.A. v. Republic of Peru
Case number: ICSID Case No. ARB/10/2
Outcome: The Tribunal dismissed all of Claimants' claims for treaty violations and ordered Claimants to pay Respondent USD 2,117,489.27 in costs.
Applicable law: Agreement between the Government of the Republic of Peru and the Government of the Argentine Republic on the Promotion and Reciprocal Protection of Investments (1994); ICSID Convention; international law
Issues in play: The case involved the interpretation of the fair and equitable treatment standard, expropriation, and full protection and security under the Peru-Argentina BIT, as well as the distinction between contractual claims and treaty claims.
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