El Salvador: ENEL Green Power Lawsuit Revived

Despite the agreement signed last December, authorities from the CEL say it reserves the right to activate in civil courts processes to collect compensation for alleged damages.

Wednesday, July 8, 2015

After ten years of international litigation by the Italian company ENEL for control of the geothermal station Enel Green Power El Salvador, where the Salvadoran State had everything to lose, in December 2014 an agreement was signed at the International Centre for Settlement of Investment Disputes (ICSID) which stated in Article 3 that: "The parties (the Salvadoran State and Enel) have agreed as a condition non precedent of the effects of the Framework Agreement, the final and irrevocable extinction of the civil action of the crime involving Enel Green Power (EGP) and Enel Green Power in El Salvador criminal proceedings number 171-A-2-13 in the Seventh Court of Peace and 133-2013-12 in the Seventh Court of Instruction, both of San Salvador, that will be extended to all natural persons who are accused of crimes in the same instance ... ".

Now, for the reasons stated as political, managers of the CEL expressed that they are reserving the right to revive charges against the officials who signed the original contracts with the Italian company.

From a statement by the Salvadoran Foundation for Economic and Social Development (FUSADES):

The agreement is binding and puts an end to the conflict CEL-ENEL

In December 2014, the Framework Agreement was made as a result of arbitration before ICSID (Num. ARB / 13/18) signed by Enel Green Power (EGP) and the Attorney General of the Republic, who signed on behalf of the Republic of El Salvador.

More on this topic

El Salvador: End of Legal Dispute with Enel Green Power

September 2015

The settlement was made through the purchase of the Salvadoran Government for $280 million stake in geothermal LaGeo which owns the Italian company.

From a statement issued by the Executive Hydroelectric Commission of the Lempa River:

While in El Salvador preparations are being made to celebrate the country's independence, in Washington representatives of the Salvadoran government and the Italian company ENEL GREEN POWER are putting and an end to a long running dispute. The agreement allows the Salvadoran State to recover the total shares of LaGeo that had been held by the Italian company.

Extra Judicial Dialogue Between El Salvador and ENEL

November 2014

At the request of the parties, arbitration and dialogue has been suspended for 30 days in order to reach an agreement over the shareholding structure of the company LaGeo.

From a statement issued by the Government of El Salvador:

Talks to find solutions to disputes between the State of El Salvador and the Italian company ENEL Green Power, over the ownership structure of the company LAGEO SA, de CV, started today in Washington, DC, with a meeting taking place on the premises of the International Centre for Settlement of Investment Disputes (ICSID), which is the forum for arbitration and conciliation of the World Bank Group.

Government of El Salvador and the Dispute with Enel Green Power

September 2014

After a French court judgment affirmed the ruling of the International Chamber of Commerce, the Sanchez Ceren administration has announced that it will continue with litigation against the Italian company.

From a statement by the Presidency of El Salvador:

Government reaffirms commitment to the defense of geothermal resources, assets of the Salvadoran people.

Arbitration Favors Italian ENEL Over Salvadoran CEL

July 2011

The decision means that ENEL will be able to capitalize the geothermal GEO and become the majority shareholder in the business it maintains with the Executive Hydroelectric Commission of the Lempa River (CEL).

According to an article in Elsalvador.com, ENEL had sued its partner for breach of contract in November 2008 because CEL had blocked a $100 million investment, which meant that ENEL went from having just over 36% the company's shares to almost 53%. "The contract, signed in 2002, provides that Enel has the right to capitalize on their investments, that is to say, investments in La Geo are transformed immediately into shares."

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