Desarrollo Vial de los Andes S.A.C. (Deviandes) v. Republic of Peru
ICSID · Investment (ICSID and treaty) · Peru · 27 Nov 2024
Why it matters
This award clarifies the scope of a host state's obligation to exhaust efforts to restore social order and assume lost toll revenues under a concession contract. It also addresses the constitution of acceptance committees and the allocation of costs in ICSID arbitration, reinforcing the 'costs follow the event' principle.
Summary
The dispute arose from a 2010 concession contract for the construction and operation of a highway in Peru. The concessionaire, Desarrollo Vial de los Andes (DEVIANDES), claimed that Peru breached the contract by failing to timely constitute an acceptance committee for completed works, and by failing to exhaust efforts to allow DEVIANDES to operate a new toll station at Ticlio due to social opposition. The Tribunal found that Peru breached its obligations: (1) by not respecting the procedure for constituting the acceptance committee, causing delays; (2) by failing to exhaust efforts to restore social order to enable toll collection at Ticlio; and (3) by not assuming the toll revenues lost as a result. The Tribunal ordered Peru to pay the lost toll revenues from 7 March 2018 until the award and ongoing until the toll station can operate or the concession ends. Peru's counterclaims were dismissed. The Tribunal also ordered Peru to pay 75% of DEVIANDES' arbitration costs and legal fees, applying the 'costs follow the event' principle under the contract and ICSID rules.
The detail
Parties: Desarrollo Vial de los Andes S.A.C. (Deviandes) v. Republic of Peru
Case number: ICSID Case No. ARB/20/18
Outcome: The Tribunal found Peru breached its obligations under the Concession Contract and ordered Peru to pay the toll revenues lost from the Ticlio toll station from 7 March 2018 until the award and ongoing, plus interest and 75% of costs.
Quantum: Ongoing monthly payments of toll revenues; USD 219,612.65 in arbitration costs and USD 2,709,539.24 in legal fees and expenses (75% of Claimant's costs).
Applicable law: Concession Contract for IIRSA Centro Tramo 2, Guarantee Contract, Peruvian law, ICSID Convention
Issues in play: Contractual obligations to constitute an acceptance committee, to exhaust efforts to restore social order, and to assume amounts not collected by the concessionaire due to force majeure or social unrest.
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