Arbitration with Teco Energy: Embargo on Guatemala

After receiving a ruling opposing the international arbitration disputed with Teco Energy, the New York State Supreme Court ordered the seizure of $15.75 million from Guatemala.

Thursday, November 5, 2020

Teco Energy is a company that was a shareholder of Empresa Eléctrica de Guatemala and years ago claimed international arbitration, arguing that from 2008 to 2013 the National Energy Commission set a maximum amount that energy distribution companies could charge the user. This measure caused losses to the distributor.

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According to Teco Energy, the decision by Guatemalan authorities violated the Free Trade Agreement between the United States, Central America and the Dominican Republic and also reduced the income of investors. This resulted in the International Center for the Settlement of Investment Disputes (CIADI) in favor of the company and against the interests of the country. reviews that "... Randolph D. Moss, a federal judge in Washington DC, had ruled that the State of Guatemala should pay US$21 million to Teco, which in principle demanded US$350 million. However, the PGN, in October 2019, held that Guatemala should not pay that compensation."

After refusing to pay, the New York Supreme Court ordered the seizure of $15.75 million from the State of Guatemala. These resources were to pay the interest on a debt that the country had issued internationally and was due on November 3, 2020.

The Guatemalan Ministry of Public Finance reported that on November 3, " received a telephone communication from the New York Mellon Bank, in which they indicated that the funds deposited in a timely manner for the payment of interest on the Eurobond due on November 3, 2020 in the amount of US$15.75 million, were frozen, due to an order from the Supreme Court of the State of New York, within an arbitration process between Teco Guatemala Holdings, LLC and the Republic of Guatemala."

The document adds that "... in this regard, it states that aware of its commitment to honor its payments derived from the placement of bonds in the international market, it is taking the necessary steps in order to resolve this legal inconvenience as soon as possible, stating that it will comply with the payment to its investors, as it has done to date."

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