The decision of which entity will bear the costs of delays in construction of El Chaparral is being discussed between the parties.
The eight-month delay in the construction of the dam, built by the Italian company Astaldi, has generated additional costs that have not yet been estimated nor has it been determined which of the parties involved will pay them.
The law enhances competitiveness and promotes a business climate in the country, says the government.
In order to strengthen legal certainty in the country and provide greater choices for enterprises to resolve trade disputes, the Government has approved the Law on International Arbitration, which shall take effect upon publication in the official newspaper La Gaceta.
The International Center for Settlement of Investment Disputes dismissed a lawsuit filed by Commerce Group.
The lawsuit filed under CAFTA terms alleged that the Government, in 2006, without justification, revoked permits which had been awarded for the exploitation of mines in San Cristobal and San Sebastian and that a request made in 2008 to extend operating licenses at the San Sebastian and Nueva Esparta mines was denied.
The problems detected could lead Cel and the Astaldi consortium, responsible for the project, to submit for international arbitration.
The faults which threaten the foundations of the dam were detected after Storm Agatha, halting all works at the site.
The Executive Committee of the Lempa River Hydroelectric Plant (Cel) and the Italian consortium Astaldi, before heading for arbitration, hired an international expert to determine who has the responsibility to cover the additional costs of a possible plant redesign.
The U.S. Corporation, a former shareholder of Empresa Eléctrica de Guatemala (EEGSA), sued the country before the ICSID in Washington.
The process is similar in its content to the one initiated by Spanish company Iberdrola (also a former shareholder of EEGSA) in December 2009, before the same institution, the International Center for Settlement of Investment Disputes (ICSID).
The Salvadoran government has filed a new set of objections after the
The document, presented as a response to the backing given by the International Center for Investment Dispute Resolution (CIADI), describes the way the company changed its nationality in order to take advantage of the benefits of the free trade agreement.
"The jurisdictional objections filed, to which El Diario de Hoy was given access, argue that Pacific Rim's claims are inadmissable owing to the abuse of due process it committed. The mining company's official headquarters used to be in the Cayman Islands, part of the United Kingdon, but since 2007 it has called Nevada home, three years after the conflict with El Salvador's Economy Ministry began".
The court at the International Centre for Settlement of Investment Disputes (ICSID) has ruled in favor of the Canadian gold mining company and dismissed preliminary objections raised by El Salvador.
Pacific Rim, owner of the El Dorado gold mine, is at the center of an international dispute with the Salvadoran government. The company claims that the government owes it at least $77 million for delays suffered to the mining project, in violation of the Central American Free Trade Agreement (CAFTA-DR).
CABEI confirmed that the works to build the new seat of the Costa Rican Legislative Assembly, valued at $96 million, will start on April 2011.
According to the contract signed with the Inter-American Development Bank on 2008, works were scheduled to start on 2010, but were delayed due to problems securing the lots.
The process was resumed after negotiations between Luis Gerardo Villanueva, president of the Assembly, and representatives from the Bank.
Dominican Republic agreed to enter an arbitration process with Costa Rica over a tariff conflict.
The Industry and Commerce Ministry of Dominican Republic issued a press release in which it agrees to the process, to “solve a conflict created by tariffs charged on Costa Rican electric conductors”.
They added that the country wants to “reach an understanding with Costa Rica to contribute to an adequate and effective management” of CAFTA-RD, the free trade agreement signed between the Central American nations, the U.S. and Dominican Republic, “by respecting and complying with all commitments established in it”.
Although the region only accounts for 10% of the global economy, it is involved in 50% of all international arbitrages filed for noncompliance in foreign investment contracts.
20 years ago, there were few cases which required international arbitrage in Latin America, and they only accounted for a few million dollars. Nowadays there are a dozens, for hundreds of millions, and in some cases, billion dollars.
CEL, the state owned energy company, will have to pay the U.S. company over $18 million in compensation.
The dispute between both organizations started in 1999, when CEL decided to end an energy procurement contract enacted 5 years earlier with energy generator Nejapa Power. The parties were unable to land satisfactory indemnification terms, so they proceeded to international arbitration.
The lawsuit was filed by Iberdrola, main shareholder and operator of EEGSA (Empresa Eléctrica de Guatemala, 'Electric Company of Guatemala').
It is the largest in Guatemala's history, and has its root in lack of agreement regarding an energy distribution tax called 'VAD' (Valor Agregado de Distribución), which came into effect on August 2008.
Prensalibre.com reports: "The company demands $336 million, value of its stock before what they call 'indirect expropriation', and another $336 million for what it could stop receiving in 2008-2013 due to changes in VAD".
The passing of Trade Act 2009 in the U.S. could modify arbitration regulations in DR-CAFTA.
Congressman Michael Michaud (D-ME) and 106 other congressmen introduced TRADE (Trade Reform, Accountability, Development, and Employment) Act of 2009, which calls for a reevaluation of international trade agreements.
This bill requires the modification of present and future trade agreements, in order to impede investor-state arbitration in favor of state-state dispute settlement mechanisms.
The proposed International Commercial Arbitrage bill looks to provide a secure judicial framework for settling international disputes.
If it is passed by the Legislative Assembly, the country will be enabled to handle international arbitrage processes. Currently, Costa Rican arbitrage centers may only handle national disputes.
Elfinancierocr.com reports: "Arbitrage centers handle dispute settlement faster and more efficiently than national courts, but they only apply if both parts previously agreed on using them".
Commerce Group filed a lawsuit, alleging El Salvador denied operation permits.
The lawsuit was filed at the International Centre for Settlement of Investment Disputes (ICSID), which is part of the World Bank. Another mining company, Pacific Rim, sued the country in June.
From an article in Elsalvador.com: "Commerce Group argues that on September 13th, 2006, the Government of El Salvador revoked, without justification or prior notice, the exploitation permits that had been granted for the mines in San Sebastián (La Unión) and San Cristóbal (San Miguel), for mining gold and silver. It adds that in 2008, the government denied a request to extend their exploitation permits for mining at Nuevo San Sebastián y Nueva Esparta (both within La Unión and Morazán)".