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Glencore Finance (Bermuda) Limited v. Plurinational State of Bolivia (PCA)

Why it matters

This award is significant for its detailed analysis of expropriation under the UK-Bolivia BIT, including the requirement of public purpose and just compensation. It also addresses key jurisdictional issues such as abuse of process, indirect investment, and the unclean hands defense. The quantum analysis provides a comprehensive methodology for valuing mining and smelting assets, including DCF and country risk premium adjustments.

Summary

Glencore Finance (Bermuda) Ltd, a Bermuda-based subsidiary of Glencore, brought an investment treaty claim against Bolivia under the UK-Bolivia BIT. The dispute arose from Bolivia's reversion (nationalization) of three assets: a tin smelter, an antimony smelter, and the Colquiri mine, which Glencore had acquired through a privatization process in the 1990s and 2000s. Bolivia argued that the privatizations were illegal and that Glencore had unclean hands, but the tribunal rejected these defenses. The tribunal found that Bolivia's reversions were expropriations without a public purpose and without just compensation, breaching Article 5 of the BIT. It also found a breach of fair and equitable treatment regarding the tin smelter reversion decree. The tribunal awarded damages of US$253.6 million, including pre-award interest, based on a discounted cash flow analysis for the Colquiri mine and other methods for the smelters. The award is notable for its thorough treatment of valuation issues, including country risk premium and discount rates.

The detail

Parties: Glencore Finance (Bermuda) Limited v. Plurinational State of Bolivia

Case number: PCA Case No. 2016-39

Outcome: Bolivia breached the UK-Bolivia BIT by expropriating the Tin Smelter, Antimony Smelter, and Colquiri Mine without public purpose or compensation, and breached fair and equitable treatment regarding the Tin Smelter. Bolivia ordered to pay US$253,591,796 in damages plus post-award interest.

Quantum: US$253,591,796

Applicable law: UK-Bolivia BIT (1988); UNCITRAL Arbitration Rules (2010); international law; Bolivian law

Issues in play: The case involved the collision between Bolivia's sovereign right to expropriate and the BIT's protections against expropriation without public purpose and compensation. Also at issue was the legality of the original privatizations and whether the investor's conduct (unclean hands) barred relief.

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