Teinver S.A., Transportes de Cercanías S.A. and Autobuses Urbanos del Sur S.A. v. The Argentine Republic
ICSID · Investment (ICSID and treaty) · Argentina · 21 Jul 2017
Why it matters
This award is significant for its detailed analysis of the fair and equitable treatment standard in the context of regulatory measures, and for addressing the defense of necessity in economic crises. It also clarified the standard for lawful expropriation, including the requirement of adequate compensation, and the treatment of third-party funding and assignment agreements in investment arbitration.
Summary
The case concerns Spanish investors (Teinver and related companies) who owned Argentine airlines Aerolíneas Argentinas and Austral. They claimed Argentina breached the Argentina-Spain BIT by imposing airfare controls that squeezed their profits, pressuring them to sell, and eventually expropriating the airlines through a series of measures culminating in a 2008 law that initiated expropriation proceedings. The Tribunal found that Argentina's airfare policies violated the fair and equitable treatment standard by failing to allow fares sufficient to cover costs and a reasonable return, as required by Argentine law. It also found that the expropriation was unlawful because it was not accompanied by prompt, adequate, and effective compensation. The Tribunal rejected Argentina's necessity defense, holding that the economic crisis did not meet the conditions for invoking necessity under customary international law. The Tribunal awarded damages to be determined in a subsequent phase. The award also addressed procedural issues regarding the investors' standing, third-party funding, and assignment of award proceeds.
The detail
Parties: Teinver S.A., Transportes de Cercanías S.A. and Autobuses Urbanos del Sur S.A. v. The Argentine Republic
Case number: ICSID Case No. ARB/09/1
Outcome: The Tribunal found Argentina liable for unlawful expropriation and breach of fair and equitable treatment, and awarded damages to Claimants.
Applicable law: Argentina-Spain BIT (1991), ICSID Convention, international law, Argentine law
Issues in play: The case involved the collision between Argentina's sovereign right to regulate airfares and expropriate for public interest, and investors' rights under the BIT to fair and equitable treatment and protection against unlawful expropriation.
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.