Quiborax S.A., Non Metallic Minerals S.A. and Allan Fosk Kaplún v. Plurinational State of Bolivia
ICSID · Investment (ICSID and treaty) · Bolivia · 16 Sep 2015
Why it matters
This case is a landmark in investment treaty arbitration for its detailed analysis of the police powers doctrine and its application to mining concessions. The Tribunal set a high bar for states seeking to justify expropriation under police powers, requiring a clear public purpose and non-discriminatory application. It also addressed the valuation of mining assets using discounted cash flow, and the standard for moral damages, which it denied. The award is frequently cited in subsequent investment disputes.
Summary
Quiborax S.A., a Chilean mining company, and its Bolivian subsidiary Non Metallic Minerals S.A. (NMM) held mining concessions for ulexite in Bolivia. In 2004, Bolivia issued Decree 27,589 revoking NMM's concessions, citing environmental and public interest concerns. The Claimants initiated ICSID arbitration under the Chile-Bolivia BIT, alleging expropriation, unfair treatment, and impairment of their investment. Bolivia argued the concessions were illegal and that the revocation was a valid exercise of police powers. The Tribunal rejected Bolivia's illegality defense, finding the concessions were validly granted. It held that the revocation was an expropriation that did not meet the BIT's requirements: it was not in accordance with the law, was discriminatory, and lacked compensation. The Tribunal also found breaches of fair and equitable treatment and impairment. It awarded USD 48.6 million in damages based on a discounted cash flow valuation of the ulexite reserves, plus interest. The claim for moral damages was dismissed as the evidence did not meet the high threshold. The Tribunal allocated costs, ordering Bolivia to pay 50% of the Claimants' share of arbitration costs. The award is significant for its analysis of police powers, valuation of mining assets, and treatment of moral damages.
The detail
Parties: Quiborax S.A., Non Metallic Minerals S.A. and Allan Fosk Kaplún v. Plurinational State of Bolivia
Case number: ICSID Case No. ARB/06/2
Outcome: The Tribunal found Bolivia breached the BIT by expropriating the Claimants' investments without complying with the requirements of Article VI, failing to guarantee fair and equitable treatment under Article IV(1), and impairing the investments through unreasonable or discriminatory measures under Article III(2). Bolivia was ordered to pay USD 48,619,578 in damages plus interest at 1-year LIBOR + 2% compounded annually from 1 July 2013 until payment. The claim for moral damages was dismissed.
Quantum: USD 48,619,578
Applicable law: Chile-Bolivia Bilateral Investment Treaty (BIT) signed 22 September 1994, in force 21 July 1999; ICSID Convention; international law; Bolivian law.
Issues in play: The case involved the collision between Bolivia's police powers to regulate mining concessions and the BIT's protection against expropriation without compensation. The Tribunal had to determine whether the revocation of mining concessions was a lawful exercise of police powers or an unlawful expropriation.
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