Houston Industries Energy, Inc. and others v. Argentine Republic
ICSID · Investment (ICSID and treaty) · Argentina · 24 Aug 2001
Why it matters
This is one of the early ICSID cases against Argentina, arising from the privatization of electricity distribution. It illustrates the tension between contractual forum selection clauses and treaty-based arbitration. The case was settled before a merits decision, but the award on costs and discontinuance provides guidance on how tribunals handle settlements and cost allocation when the dispute is resolved between the investor and the local government entity, not the state party to the arbitration.
Summary
The case arose from a privatization process in the Province of Santiago del Estero, Argentina. In 1994, Reliant Energy (a US company) acquired 90% of EDESE, the provincial electricity distributor, under a concession contract. Disputes arose over alleged breaches of the bid rules, concession contract, and provincial/national laws by the Province and the regulatory body ENRESE. The investors initiated ICSID arbitration against Argentina under the US-Argentina BIT, claiming that the Province's actions amounted to treaty violations. Argentina objected to jurisdiction, arguing that the dispute was contractual and should be resolved in local courts as per the concession contract. The Tribunal decided to join jurisdiction to the merits. Before the merits hearing, the investors reached a settlement with the Province in February 2000, which was approved by the provincial legislature. The settlement resolved the underlying claims. The investors then requested discontinuance of the arbitration. Argentina opposed, seeking reimbursement of its costs. The Tribunal found that the dispute had ceased to exist and ordered discontinuance. On costs, the Tribunal noted that there was no clear winner or loser, but the investors had the prevailing interest in the proceedings. It ordered the investors to reimburse Argentina US$135,000 for advances paid to ICSID, but each party bore its own legal fees and other costs. The Tribunal rejected Argentina's claim for additional costs due to lack of documentation.
The detail
Parties: Houston Industries Energy, Inc. and others v. Argentine Republic
Case number: ICSID Case No. ARB/98/1
Outcome: The Tribunal ordered discontinuance of the proceeding and ordered Claimants to reimburse Respondent US$135,000 for advances paid to ICSID, with each party bearing its own other costs.
Quantum: US$135,000
Applicable law: Treaty between United States of America and Argentine Republic concerning the Reciprocal Encouragement and Protection of Investment (1991); ICSID Convention; ICSID Arbitration Rules
Issues in play: The case involved the interplay between contractual dispute resolution clauses (providing for local courts) and the investor's right to invoke the bilateral investment treaty's arbitration provisions. The Tribunal had to consider whether the dispute was a treaty claim or a mere contract claim.
Read the full decision at italaw ↗
Locus Standi links to the source decision and publishes its own plain-language summary. It does not reproduce the text of the award.