Arbitration Team of the Month #20
A failed partnership between a Spanish renewable company and a State-owned Dominican company led to an interesting arbitration won for the investor by Akerman’s team. Although the Tribunal found the State liable, it awarded only a fraction of the damages claimed by the Claimant. Read below the legal rationale adopted by the Tribunal.
Akerman is this month’s ATOM for its extensive work in international arbitration. According to data available on Jus Mundi, Akerman has been involved in at least 16 international case(s) known by Jus Mundi (14 Commercial Arbitrations, 2 Investor-States). 1 of this case is currently pending.
Their high-profile cases cover a wide range of economic sectors, including Administrative and support service activities; Information and communication; Wholesale and retail trade, repair of motor vehicles and motorcycles; Financial and insurance activities; Real estate activities; Professional, scientific and technical activities; Arts, entertainment and recreation; Mining and quarrying; Electricity, gas, steam and air conditioning supply (energy); Construction; and Accommodation and food service activities.
Recent victory case analysis
- In 2007, the Dominican Republic (“DR”) adopted an Electricity Law and an implementation decree to encourage renewable energy projects in the country, through tax exemptions and guaranteed remunerations.
- In 2009, Dominicana Renovables, S.L. (“DRSL”) was granted a provisional concession agreement for a wind farm.
- DRSL conducted a mutli-year study of the wind patterns in the area, leased property and obtained all the required licences. In short, it complied with all the requirements for obtaining a permanent concession, which was formalized in 2013.
- The concession agreement required the conclusion of a Power Purchase Agreement (“PPA”) between DRSL and a State-owned energy company. They subsequently entered into negociations.
- In 2016, the State-owned company informed DRSL that the negociations would not continue. As a consequence, no PPA was ever signed.
- In 2018, pursuant to the concession agreement’s arbitration clause, DRSL lodged a claim with the ICC.
Arbitral Tribunal constitution
- Stanimir A. Alexandrov (President)
- Juan Pablo Cárdenas Mejía (Appointed by the State)
- Oscar M. Garibaldi (Appointed by the investor)
- The Arbitral Tribunal rendered an Award in 2021.
- It found that the Dominican Republic State could be held responsible for the acts of its State-owned energy company.
- It ruled that the concession agreement was breached when the State-owned energy company refused to negociate in good faith a PPA with DRSL. The good faith duty implied an obligation for the State to ensure that its State-owned company would negociate and conclude the PPA. Indeed, the State had an obligation to use all available means to facilitate the conclusion of the PPA between DRSL and its State-owned company.
- The Tribunal ruled that the State-owned had a duty to conclude a PPA with DRSL, abstaining from deciding whether such obligations were of result or of means. The fact that no PPA was ever concluded was sufficient to render the State liable under the concession agreement.
- It was noted that the State-owned company had concluded PPAs with other renewables companies which did not have permanent concession agreements. The Tribunal therefore found that this amounted to a malicious conduct.
- The Tribunal decided that compensation to DRSL should not be discounted based on the alledged contributory fault of DRSL in the failure to conclude the PPA which could not entirely be attributed to the State. Although the Tribunal admitted into evidence a recording of the negotiations taken without the DRSL’s knowledge where one of its representative admitted to a lack of sufficient diligence, it found it insufficient to establish a contributory fault or negligence on DRSL’s part.
- The Tribunal ruled that the construction of the wind park project was too uncertain and the future profit was eventual or hypothetical. It therefore did not grant lost profits to DRSL.
- Taking a sunk costs approach, the Tribunal only awarded USD 2.3M plus interest to DRSL. DRSL had claimed about USD 300M in damages.
- The Tribunal also ordered the resolution of the concession agreement.
- Finally, the Tribunal held that the State should be liable for the entirety of the arbitration costs and 10% of DRSL’s legal costs.
- DRSL then sought to confirm the award’s liability findings with US courts but also requesting that the Tribunal’s decision not to award any lost profit be set aside.
- In March 2022, the U.S. District Court for the Southern District of Florida confirmed the Award in its entirety. Read the Order here.
Presentation of the law firm & international arbitration practice
Akerman is a client-driven enterprise, recognized by Financial Times as among the most forward-thinking law firms in the industry that combines a culture of innovation and creativity with a century of enterprise stability.
A full-service, national firm with lawyers and professional business staff coast to coast, Akerman is present in 24 cities across the United States with over 700 lawyers. From geography to practice specialty and industry knowledge, versatility is a core trait for Akerman.
Akerman’s International Litigation and Arbitration team has a long record of accomplishment in resolving complex multijurisdictional disputes. They represents multinational, foreign, and domestic corporations and individuals before U.S. federal and state courts, as well as in arbitration proceedings before a wide range of international arbitral bodies in multiple jurisdictions. They help clients successfully address conflicts in a broad range of sectors, including general commercial disputes, power and energy, construction and engineering, and banking and finance, among many others. They work in tandem with experienced local counsel to provide seamless resolution to disputes throughout Latin America, as well as in Europe, Asia Pacific, Africa, and the Middle East.
Key clients of the firm’s international arbitration practice
- Camilleri 2015 Family LLC
- Dominicana Renovables, S.L
- Hotel TOC, Inc.
- Eurochem Trading USA Corporation
- Bacilio Amorrortu
- Kipling Apparel Corp. and VF Sportswear, Inc.
- Color Events B.V.
- Magotteaux International S.A.
Table of international arbitration cases involving Akerman*
Akerman is currently acting as counsel in multiple investor-State and commercial arbitration cases, notably representing clients in ICC proceedings.
Akerman earns its spot to be the ATOM for its extensive track record of international arbitration cases and clients. We selected a few recent victories and ongoing cases in the table below.
Please click here to see all types of cases (investor-State, inter-State, and commercial arbitration) involving Akerman available on Jus Mundi.
(Note*: This table is not exhaustive.)
Dominicana Renovables v. Dominican Republic – arbitration team
Luis A. Perez is the Co-Office Managing Partner and Chair of Akerman’s Latin America and the Caribbean Practice, an internationally recognized team providing legal counsel across multiple disciplines. He focuses his practice on dispute resolution and handles commercial litigation and arbitration across the United States and Latin America for clients in various sectors including manufacturing, defense contracting, energy, technology, financial services, and medical devices.
- Tracy Leal (Akerman, Miami, United States)
- Rebeca Mosquera
- Alejandro E. Chevalier
- Francisco A. Rodriguez
Dominicana Renovables v. Dominican Republic – enforcement team
Ana Portal focuses her practice on international dispute resolution across a myriad of sectors. Her practice encompasses complex litigation matters, international commercial and investment arbitrations, and international business transactions. She has experience with international arbitrations under the institutional arbitral rules of the International Chambers of Commerce (ICC), the American Arbitration Association (ICDR), the Hong Kong International Arbitration Centre (HKIAC), the United Nations Commission on International Trade Law (UNCITRAL), and the International Centre for the Settlement of Investment Disputes (ICSID). In addition, she is experienced in litigating actions in both state and federal courts in the United States.