Energy: Guatemala Gains Demand

After IC Power Asia Development sued the Guatemalan State for violating its rights under the Agreement for the Promotion and Reciprocal Protection of Investments, the Permanent Court of Arbitration ruled in favor of the Guatemalan government.

Monday, October 12, 2020

On February 20, 2018, the Israeli entity IC Power Asia Development LTD. (former owner of Energuate) sued the State of Guatemala as a result of an inspection carried out by the Superintendence of Tax Administration (SAT), to verify the liquidation of Income Tax (ISR), informed the Ministry of Economy (Mineco).

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According to IC Power Asia Development, their rights under the Agreement for the Promotion and Reciprocal Protection of Investments, signed between Guatemala and Israel and in force since January 15, 2009, were violated by filing criminal complaints for tax fraud and requesting precautionary measures, without exhausting the administrative procedure.

The amount claimed for the alleged violation was $117 million.

The official statement highlights that "... in its defense, the Republic of Guatemala argued that the plaintiff did not have an investment protected under the Agreement, since it had sold its participation to other distributors, and that the conduct of the State in this case does not constitute a violation of the Agreement, because there is no denial of justice towards the investor."

The document concludes that on October 7, 2020, the Permanent Court of Arbitration ruled that Guatemala had not violated the Investment Agreement signed with Israel, and ordered the plaintiff to pay the costs of the arbitration in the amount of approximately $1.8 million.

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