Italba Corporation v. Oriental Republic of Uruguay
ICSID · Investment (ICSID and treaty) · Uruguay · 22 Mar 2019
Why it matters
This case underscores the importance of proving ownership and control of an investment under ICSID and treaty requirements. The tribunal applied strict scrutiny to share transfer formalities and actual control, setting a precedent that failure to comply with local law on share endorsements can defeat jurisdiction. It also highlights the 'loser pays' cost principle in ICSID arbitration.
Summary
Italba Corporation, a US company, claimed that Uruguay breached the US-Uruguay BIT by revoking a license held by Trigosul S.A., a Uruguayan company, to provide wireless data services. Italba alleged it owned Trigosul through an endorsement of share certificates. Uruguay objected to jurisdiction, arguing Italba was not an investor because it neither owned nor controlled Trigosul. The tribunal examined Uruguayan law on share transfers and found that the endorsement of Trigosul's shares to Italba was not in conformity with legal requirements (it lacked a notarized date and was not recorded in the company's share registry). Moreover, Italba presented no evidence of exercising control over Trigosul's management, sharing profits or losses, or representing itself as a shareholder to third parties. The tribunal upheld Uruguay's objection, declining jurisdiction. It also rejected Italba's request to disregard an expert report. Applying the 'loser pays' principle, the tribunal ordered Italba to pay all arbitration costs and Uruguay's legal fees, totaling USD 5,885,344.17.
The detail
Parties: Italba Corporation v. Oriental Republic of Uruguay
Case number: ICSID Case No. ARB/16/9
Outcome: Tribunal upheld Uruguay's objection to jurisdiction; Italba neither owns nor controls Trigosul S.A., so Tribunal lacks jurisdiction. Italba ordered to pay Uruguay USD 5,885,344.17 in costs.
Applicable law: Treaty Between the United States of America and the Oriental Republic of Uruguay Concerning the Encouragement and Reciprocal Protection of Investment (2005); ICSID Convention; Uruguayan law on share transfer and control.
Issues in play: The key issue was whether Italba owned or controlled Trigosul under the Treaty and ICSID Convention. Uruguayan law on share endorsement and control was applied to determine Italba's status as an investor.
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