Webuild S.p.A. (formerly Salini Impregilo S.p.A.) v. Argentine Republic
ICSID · Investment (ICSID and treaty) · Argentina · 3 Mar 2023
Why it matters
This decision is significant for its detailed analysis of the fair and equitable treatment standard in the context of economic crises, particularly regarding the scope of legitimate expectations and the state's margin of appreciation. It also provides guidance on calculating damages in long-term infrastructure concessions, including the treatment of toll rates, subsidies, and discount rates. The case is one of several ICSID arbitrations arising from Argentina's 2001-2002 crisis, contributing to the jurisprudence on necessity and FET.
Summary
Webuild S.p.A. (formerly Salini Impregilo S.p.A.), an Italian construction company, invested in a road and bridge project connecting Victoria and Rosario in Argentina through a local concessionaire, Puentes del Litoral S.A. The concession contract was signed in 1998. Following Argentina's 2001-2002 economic crisis, the government enacted emergency laws that altered the economic balance of the concession. Despite multiple renegotiation attempts, the concession was terminated by Argentina in 2014. Webuild brought an ICSID claim under the Italy-Argentina BIT, alleging violations of fair and equitable treatment (FET), non-discrimination, and expropriation. Argentina raised a defense of necessity. The Tribunal, in its Decision on Liability, found Argentina liable for breaching the FET standard by failing to restore the concession's economic equilibrium as promised in a 2006 Letter of Understanding, thereby frustrating Webuild's legitimate expectations. However, the Tribunal dismissed the expropriation and discrimination claims. It also rejected Argentina's necessity defense. The Tribunal deferred the quantum determination, providing detailed instructions for calculating damages, including the use of a discounted cash flow method, specific assumptions on toll rates, subsidies, and discount rates. The decision is notable for its nuanced analysis of FET in crisis contexts and its detailed guidance on damages calculation.
The detail
Parties: Webuild S.p.A. (formerly Salini Impregilo S.p.A.) v. Argentine Republic
Case number: ICSID Case No. ARB/15/39
Outcome: The Tribunal found Argentina liable for breaching the fair and equitable treatment standard under the Italy-Argentina BIT, but dismissed claims for expropriation and discrimination. The quantum phase was deferred with detailed instructions for calculating damages.
Applicable law: Agreement between the Argentine Republic and the Republic of Italy on the Promotion and Protection of Investments (1990); ICSID Convention; Concession Contract; Argentine law
Issues in play: The case involved the interplay between Argentina's emergency measures during its 2001-2002 financial crisis and the investor's legitimate expectations under the FET standard. The Tribunal had to determine whether the state's actions violated the BIT's protections despite the economic necessity defense.
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