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Aguas del Tunari, S.A. v. Republic of Bolivia. ICSID Case no. ARB/02/3. Jurisdiction. 20 ICSID

Published online by Cambridge University Press:  27 February 2017

Daniel Bodansky  and
Kenneth J. Vandevelde
Kenneth J. Vandevelde
Affiliation:
Thomas Jefferson School of Law
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Extract

Aguas Del Tunari, S.A. v. Republic of Bolivia, ICSID Case No. ARB/02/3. Jurisdiction. 20 ICSID Review: Foreign Investment Law Journal 450 (2005).

International Centre for Settlement of Investment Disputes, October 21, 2005.

In Aguas del Tunari v. Republic of Bolivia, an International Centre for Settlement of Investment Disputes (ICSID) tribunal held that it had jurisdiction under the Netherlands-Bolivia bilateral investment treaty (BIT) over a claim against Bolivia brought by a Bolivian company owned primarily by two companies— one American and one Spanish—through Dutch intermediaries. The tribunal found that the Dutch intermediaries “controlled” the Bolivian company and that jurisdiction existed notwithstanding that the dispute related to a concession agreement with a choice-of-forum clause designating Bolivian courts.

The origin of the dispute lay in Bolivia's attempt in the late 1990s to privatize the water service in Cochabamba, its third largest city. In September 1999, Bolivia awarded a forty-year concession agreement to a Bolivian company, Aguas del Tunari, S.A. (AdT), for the exclusive provision of water services in the city.

Type
International Decisions
Information
American Journal of International Law , Volume 101 , Issue 1 , January 2007 , pp. 179 - 184
Copyright
Copyright © American Society of International Law 2007

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References

1 Aguas del Tunari, S.A. v. Republic of Bolivia, ICSID Case No. ARB/02/3, Jurisdiction, 20 ICSID Rev.: Foreign Investment L.J. 450 (2005).

2 The International Centre for Settlement of Investment Disputes (ICSID) is an agency of the World Bank that arbitrates investment disputes between a state and nationals of another state. The text of the Convention under which it was created, its arbitration rules, and documents pertaining to the cases it has arbitrated are available at <http://www.worldbank.org/icsid>.

3 Agreement on Encouragement and Reciprocal Protection of Investments Between the Kingdom of the Netherlands and the Republic of Bolivia, Mar. 10, 1992. The text is available at <http://www.unctad.org/sections/dite/iia/docs/bits/Netherlands_bolivia.pdf>.

4 On July 5, 2002, ICSID constituted a tribunal consisting of Henri C. Alvarez of Canada, Jose Luis Alberro– Semerena of Mexico, and David D. Caron of the United States, who served as president.

5 All treaty and contract provisions cited by the tribunal are included in Appendix II of the decision.

6 Bechtel originally sought to implement a different reorganization, for which it requested Bolivia’s approval. When the approval was denied, Bechtel implemented a different reorganization, asserting that Bolivia’s approval was not needed for that reorganization.

7 In addition, a Spanish company became Bechtel’s co–owner of the Dutch intermediary that owned the second intermediary and, thus indirectly, the third intermediary.

8 Following the reorganization, Bechtel had only a 50 percent interest in the Dutch intermediaries, the other 50 percent being owned by a Spanish company. Bolivia contended that Bechtel nevertheless exercised the ultimate control over AdT.

9 May 23, 1969, 1155 UNTS 331.

10 UN Conference on Trade and Development, Developments in International Investment Agreements in 2005, at 2 (2006), UN Doc. UNCTAD/WEB/ITE/IIA/2006/7 (2006 IIA Monitor, No. 2), available at <http://www.unctad.org>.

11 Id. at 8.

12 For example, in CMS Gas Transmission Co. v. Republic of Argentina, ICSID Case No. ARB/01/8 (May 12, 2005), 44 ILM 1205 (2005), the tribunal’s award was in excess of $130 million, and awards in some other cases have been larger.

13 Stanimir A., Alexandrov, Breaches of Contract and Breaches of Treaty: The Jurisdiction of Treaty–Based Arbitration Tribunals to Decide Breach of Contract Claims in SGS v. Pakistan and SGS v. Philippines, 5 J. World Inv. & Trade 555 (2004)Google Scholar (reviewing ICSID cases only).

14 For an excellent discussion of the background of this case and of Article 41.2 by counsel for Bolivia in the dispute, see Alex, de Gramont, After the Water War: The Battle for Jurisdiction in Aguas Del Tunari, S.A. v. Republic de Bolivia, Transnat’l Disp. Mgmt., Dec. 2006, available at <http://www.transnational–dispute–management.com>Google Scholar.

15 Lanco Int’l Inc. v. Argentine Republic, ICSID Case No. ARB/97/6, Preliminary Decision (Dec. 8, 1998), 40 ILM 457 (2001).

16 The Lanco decision was followed in a series of cases, including Compania de Aguas del Aconquija S.A. v. Argentine Republic, ICSID Case No. ARB/97/3, Award (Nov. 21, 2000), 40 ILM 426 (2001); Salini Costruttori S.P.A. v. Kingdom of Morocco, ICSID Case No. ARB/00/4, Jurisdiction (July 23, 2001), 42 ILM 609 (2003); and CMS Gas Transmission Co. v. Republic of Argentina, ICSID Case No. Arb/01/8, Jurisdiction (July 17, 2003), 42 ILM 788 (2003).

17 Compania de Aguas del Aconquija S.A. v. Argentine Republic, ICSID Case No. ARB/01/3, Annulment (July 3, 2002), 41 ILM 1153 (2002).

18 The Ad Hoc Committee’s reasoning was followed in SGS Société Générale de Surveillance S.A. v. Islamic Republic of Pakistan, ICSID Case No. ARB/01/13, Jurisdiction (Aug. 6, 2003), 42 ILM 1290 (2003). But see SGS Société Générale de Surveillance S.A. v. Islamic Republic of the Philippines, ICSID Case No. ARB/02/6, Jurisdiction (Jan. 29, 2004), 8 ICSID Rep. 518 (2005), where the tribunal found that the more general BIT language should not be held to override the more specific language of the choice–of–forum clause. Thus, the contractual issues were to be resolved by local courts, and any BIT claims that depended on the resolution of contractual issues would be deferred until the local courts had ruled on those issues.

19 Azurix Corp. v. Argentine Republic, ICSID Case No. ARB/01/12, Jurisdiction (Dec. 8, 2003), 43 ILM 262 (2004).

20 See Plama Consortium Ltd. v. Republic of Bulgaria, ICSID Case No. ARB/03/24, Jurisdiction, paras. 141, 150 (Feb. 8, 2005), 44 ILM 721 (2005).

21 See Ole, Spiermann, Individual Rights, State Interests and the Power to Waive ICSID Jurisdiction Under Bilateral Investment Treaties, 20 Arb. Int’l 179 (2004)Google Scholar.

22 Kenneth J., Vandevelde, The Political Economy of a Bilateral Investment Treaty, 92 AJIL 621 (1998)Google Scholar.