President Allende Foundation, Victor Pey Casado and Coral Pey Grebe v. Republic of Chile (II)
PCA · Investment (ICSID and treaty) · Chile · 28 Nov 2019
Why it matters
This award clarifies that an investor must have a current 'investment' under the applicable BIT at the time of the alleged breach for the treaty's substantive protections to apply. The Tribunal held that the prior ICSID award did not itself constitute an investment, and that the original investment had been extinguished by expropriation and subsequent legal proceedings. The decision reinforces the temporal requirement for treaty protection and limits the ability to bring fresh claims based on alleged post-award misconduct.
Summary
The case arises from the expropriation of the newspaper El Clarín in Chile in the 1970s. After Chile's return to democracy, the Spanish investors (the Pey family and the President Allende Foundation) sought compensation. They obtained an ICSID award in 2008 (the First Award) ordering Chile to pay damages. However, that award was partially annulled, and a resubmission tribunal issued a new award in 2016 (the Resubmission Award) reducing the compensation. Claimants then initiated a new UNCITRAL arbitration (the present case) alleging that Chile had committed further breaches by failing to comply with the Resubmission Award and by engaging in denial of justice in Chilean courts. Chile objected to jurisdiction, arguing that the BIT did not apply because Claimants no longer had an 'investment' in Chile at the time of the alleged breaches. The Tribunal agreed. It found that the BIT's substantive protections (fair and equitable treatment, expropriation, etc.) only apply to existing investments. The original investment (the newspaper) had been expropriated and was no longer owned by Claimants. The subsequent ICSID awards did not themselves constitute an 'investment' under the BIT. Therefore, the Tribunal lacked jurisdiction over all claims. The Tribunal also rejected Claimants' argument that the BIT's dispute resolution clause (Article 10) could be invoked independently of the substantive protections. The award was unanimous. Claimants were ordered to pay the arbitration costs and 80% of Chile's legal fees.
The detail
Parties: President Allende Foundation, Victor Pey Casado and Coral Pey Grebe v. Republic of Chile (II)
Case number: PCA Case No. 2017-30
Outcome: The Tribunal dismissed all claims for lack of jurisdiction and ordered Claimants to bear the costs of arbitration and reimburse 80% of Respondent's legal costs.
Applicable law: Agreement between the Kingdom of Spain and the Republic of Chile on the Reciprocal Protection and Promotion of Investments (1991); UNCITRAL Arbitration Rules (1976)
Issues in play: The dispute concerned whether the Spain-Chile BIT applied to claims arising from alleged denial of justice and non-enforcement of a prior ICSID award, where the underlying investment had been expropriated decades earlier. The Tribunal had to determine whether Claimants still held an 'investment' under the BIT at the time of the challenged conduct.
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.