Zeyad Abouellail, <\/strong>Senior Legal Officer at Jus Mundi<\/strong><\/a><\/strong><\/p>\n\n\n\n
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\nArbitration Aftermath with Zeyad Abouellail and Esen Ayd\u0131n: Your trusted source for the latest post-award developments in the dynamic world of investor-State and commercial arbitration. Back with a fresh perspective, Zeyad focuses on cases involving States, ministries, and public entities, while Esen handles disputes between private parties. From settlements and compliance with awards to recognition, enforcement procedures, annulment, and beyond. Each week, we bring you global insights and updates to navigate this ever-evolving landscape.<\/p>\n\n\n\n
\nDiscover more digests<\/a><\/div>\n<\/div>\n<\/blockquote>\n\n\n\n<\/div>\n\n\n\n
\n\n\n\nKuntur Wasi and Corporaci\u00f3n Am\u00e9rica v. Peru<\/em><\/strong><\/a><\/em><\/strong><\/em><\/em><\/strong><\/strong><\/em><\/strong><\/strong><\/h2>\n\n\n\n
Peru Declared in Default in US Enforcement Proceedings of USD 90 Million BIT Award<\/strong><\/h4>\n\n\n\n
<\/div>\n\n\n\nICSID Case No. ARB\/18\/27<\/strong>
Institution: <\/strong>ICSID<\/a> (International Centre for Settlement of Investment Disputes)
Tribunal:<\/strong> Lucinda A. Low<\/a> (President), Enrique Barros Bourie<\/a> (Appointed by the claimants), Jos\u00e9 Emilio Nunes Pinto<\/a> (Appointed by the State)<\/p>\n\n\n\n
\n\n\n\n<\/div>\n\n\n\nOn 8 April, Peru<\/a> was declared in default<\/a> in enforcement proceedings before the United States District Court for the District of Columbia (\u201cColumbia District Court<\/strong>\u201d), following its failure to appear after service of process was completed by Sociedad Aeroportuaria Kuntur Wasi (\u201cKuntur Wasi<\/strong>\u201d).<\/p>\n\n\n\n
Background<\/strong><\/p>\n\n\n\n
In 2014, Peru-based Kuntur Wasi and Peru\u2019s Ministry of Transport and Communications (\u201cMTC<\/strong>\u201d) entered into a concession contract<\/a> for the construction and operation of Chinchero Airport in Cuzco. Following a change in government, the parties negotiated an addendum amending certain financial terms, which was signed in 2017 after receiving approval from the relevant state entities.<\/p>\n\n\n\n
Shortly thereafter, the Contralor\u00eda General of Peru (\u201cContralor\u00eda<\/strong>\u201d) issued a report questioning the validity of the addendum. It raised concerns over the MTC\u2019s decision to provide Kuntur Wasi with a USD 40 million advance during Phase 1, rather than in Phase 2 as originally planned, and through an account outside the designated trust. The report warned of potential misuse of funds and recommended that the MTC assess the associated risks. In its final report later that year, the Contralor\u00eda concluded that the addendum violated public-private partnership regulations and altered the original tender conditions. Although subsequent negotiations were held, no resolution was reached, and Peru ultimately terminated the contract, citing public interest grounds.<\/p>\n\n\n\n
In June 2018, Kuntur Wasi and Argentina-based Corporaci\u00f3n Am\u00e9rica, which held a 50% stake in Kuntur Wasi, initiated arbitration<\/a> under the Argentina\u2013Peru BIT (1994)<\/a> and the concession contract<\/a>.<\/p>\n\n\n\n
In August 2023, the arbitral tribunal issued a Decision on Jurisdiction, Liability, and Certain Aspects of Quantum<\/a>. It upheld jurisdiction over Kuntur Wasi\u2019s BIT claims and Corporaci\u00f3n Am\u00e9rica\u2019s contractual claims. As the tribunal upheld jurisdiction over Kuntur Wasi\u2019s claims under the ICSID Convention and the BIT, it deemed it unnecessary to decide whether Corporaci\u00f3n Am\u00e9rica, \u201cnotwithstanding its lack of contractual privity, can maintain claims under the <\/em>Concession Contract<\/em><\/a> and <\/em>Guarantee Agreement<\/em><\/a>, via the BIT\u2019s MFN clause<\/em>\u201d.<\/p>\n\n\n\n
On the merits, the tribunal found that Peru had breached the concession contract by terminating it without a valid public interest justification. Although Peru\u2019s conduct did not meet the thresholds of dolo<\/em> (intentional misconduct) or culpa inexcusable<\/em> (inexcusable negligence) under Peruvian law, the tribunal held that it nevertheless violated the BIT\u2019s FET standard and the prohibition against unjustified or discriminatory measures.<\/p>\n\n\n\n
In May 2024, the tribunal ordered<\/a> Peru to pay Kuntur Wasi USD 91 million in compensation for the BIT breaches, while directing each party to bear its own legal costs.<\/p>\n\n\n\n
US Enforcement Proceedings<\/strong><\/p>\n\n\n\n
In July 2024, Kuntur Wasi filed a petition to enforce<\/a> the award before the Columbia District Court. Subsequently, the investor filed a motion<\/a> for issuance of a letter rogatory pursuant to the Inter-American Convention on Letters Rogatory 1975, which the Court granted<\/a> in September 2024.<\/p>\n\n\n\n
In February 2025, Kuntur Wasi received a letter<\/a> from the Peruvian embassy to the United States certifying that service had been successfully effected. However, Peru failed to appear or file a response to the petition within the prescribed timeframe. As a result, Kuntur Wasi filed a petition<\/a> for entry of default against Peru earlier this month.<\/p>\n\n\n\n
On 8 April, Kuntur Wasi\u2019s petition was granted<\/a>, and the Clerk of the Columbia District Court declared Peru in default.<\/p>\n\n\n\n
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\n\n\n\nNachingwea and others v. Tanzania<\/strong><\/a><\/em><\/strong><\/a><\/em><\/strong><\/em><\/em><\/strong><\/h2>\n\n\n\n
Tanzania Completes USD 90 Million Payment to Settle BIT Award with UK Investor<\/strong><\/h4>\n\n\n\n
<\/div>\n\n\n\nICSID Case No. ARB\/20\/38<\/strong>
Institution: <\/strong>ICSID<\/a> (International Centre for Settlement of Investment Disputes)
Tribunal:<\/strong> Cavinder Bull<\/a> (President), Doak Bishop<\/a> (Appointed by the claimants), Sanji Mmasenono Monageng<\/a> (Appointed by the State)
Ad hoc Committee: <\/strong>Rolf Knieper<\/a> (President of the ad hoc Committee), Bertha Cooper-Rousseau<\/a>, Githu Muigai<\/a> (Members)<\/p>\n\n\n\n
\n\n\n\n<\/div>\n\n\n\nOn 7 April, Australia-based Indiana Resources announced<\/a> that it had received USD 30 million from Tanzania as the final instalment of a USD 90 million settlement deed. Indiana Resources is the majority shareholder of the claimants in the ICSID arbitration.<\/p>\n\n\n\n
Indiana Resources and Tanzania<\/a> concluded a USD 90 million settlement deed to settle the ICSID award<\/a>, the original amount of which totalled USD 109 million, plus interest and costs. The settlement was first announced<\/a> in July 2024.<\/p>\n\n\n\n
The agreement was reached while annulment proceedings initiated by Tanzania were pending before ICSID (See our previous digests here<\/a> and here<\/a>). Although the ICSID website continues to record the annulment proceedings as pending, they have been suspended by mutual agreement of the parties since 31 July 2024.<\/p>\n\n\n\n
Despite Tanzania having completed the payment, Indiana reports<\/a> that Nachingwea Nickel Limited (\u201cNNL<\/strong>\u201d) has received a \u201cNotice of Jeopardy Assessment\u201d from the Tanzanian Revenue Authority. The Authority alleges that NNL owes taxes to Tanzania with respect to the settlement amount. Indiana denies that any such tax is payable, asserting that the tax assessment constitutes a breach of the settlement deed. It further maintains that the claimants in the arbitration \u201cwill not be in a position to issue a letter of discontinuance to the International Centre for Settlement of Investments Disputes while the breach remains unremedied<\/em>.\u201d<\/p>\n\n\n\n
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\n\n\n\nStrabag and others v. Germany<\/strong><\/a><\/strong><\/a><\/em><\/strong><\/em><\/h2>\n\n\n\n
Austrian Investor Files for Enforcement of EUR 240 Million Intra-EU ECT Award Against Germany in the US<\/strong><\/h4>\n\n\n\n
<\/div>\n\n\n\nICSID Case No. ARB\/19\/29<\/strong>
Institution: <\/strong>ICSID<\/a> (International Centre for Settlement of Investment Disputes)
Tribunal:<\/strong> Veijo A. Heiskanen<\/a> (President), Judith E. Gill<\/a> (Appointed by the claimants), Maria Chiara Malaguti<\/a> (Appointed by the State)<\/p>\n\n\n\n
\n\n\n\n<\/div>\n\n\n\nOn 4 April, subsidiaries of Austria-based Strabag, Erste Nordsee-Offshore Holding (\u201cNOH1<\/strong>\u201d) and Zweite Nordsee-Offshore Holding (\u201cNOH2<\/strong>\u201d), filed<\/a> for enforcement of a EUR 240 million ICSID award<\/a> against Germany<\/a> before the United States District Court for the District of Columbia. The award was rendered under the Energy Charter Treaty (1994)<\/a> (\u201cECT<\/strong>\u201d) and is the only known decision to date holding Germany liable under the ECT.<\/p>\n\n\n\n
The 18 December 2024 Award<\/a> and the 10 March 2025 Decision on the Respondent\u2019s Request for a Stay of Enforcement of the Award, Return of the Certified Award, and Suspension of Accrual of Interest<\/a> (rendered in the context of rectification proceedings initiated by Germany) were submitted as exhibits to the enforcement petition.<\/p>\n\n\n\n
The dispute arose from a series of legislative and regulatory measures adopted by Germany concerning offshore wind energy projects. Between 2000 and 2012, Germany implemented policies aimed at incentivising investments in offshore wind, including favourable feed-in tariffs, shifting grid connection costs from project developers to transmission system operators, and offering incentives for early project completion. This regulatory framework prompted Strabag\u2014the parent company of NOH1 and NOH2\u2014to invest in several offshore wind projects in 2011 and 2012. Strabag asserts that its investments amounted to approximately EUR 122 million.<\/p>\n\n\n\n
Between 2012 and 2017, Germany revised the regulatory framework governing offshore wind energy. Strabag alleged that these modifications substantially impaired its investments, resulting in significant financial losses. Strabag, along with NOH1 and NOH2, initiated arbitration under the ECT<\/a> in 2019.<\/p>\n\n\n\n
In July 2020, the tribunal rejected<\/a> Germany\u2019s Rule 41(5) objection based on the intra-EU nature of the dispute. A year later, it also denied<\/a> the State\u2019s request to bifurcate the proceedings and address the objections to jurisdiction<\/a> as a preliminary question.<\/p>\n\n\n\n
In December 2024, the tribunal issued its Award<\/a>. On jurisdiction, it unanimously rejected Germany\u2019s intra-EU objection and found that the claimants had made qualifying investments under both the ICSID Convention and the ECT. On the merits, a tribunal majority held that Germany had violated the ECT\u2019s fair and equitable treatment<\/a> standard. The majority further found that Germany\u2019s actions amounted to an expropriation<\/a> of the claimants\u2019 investments. However, the tribunal dismissed claims that Germany had also breached the ECT\u2019s full protection and security<\/a> standard and the non-impairment clause.<\/p>\n\n\n\n
The tribunal ordered Germany to pay NOH1 EUR 61.4 million and NOH2 EUR 179.5 million, plus interest, as well as USD 368,500, GBP 548,577, and EUR 4.8 million in costs.<\/p>\n\n\n\n
Ms Maria Chiara Malaguti<\/a> issued a partial dissent<\/a>, stating that while she did not disagree with the tribunal\u2019s finding that Germany was liable under the ECT, \u201cthat the point in time for the initiation of the violations under both Article 10(1) and Article 13 ECT would differ from that established by the Tribunal Majority and be set at the time of adoption of the 2017 Offshore Wind Energy Act. This would affect also the valuation date, to be postponed to early 2017<\/em>.\u201d She added that \u201call acts and behaviors before the 2017 Renewable Energy Sources Act were instead legitimate manifestations of the State’s right to regulate, which did not constitute per se a radical change, were proportionate, and would not come as totally unexpected to investors<\/em>\u201d.<\/p>\n\n\n\n
In January 2025, Germany filed a request for rectification of the award<\/a>, alleging errors in the calculation of the costs order. It also requested a stay of enforcement, the return of the certified copy of the award by the claimants, and a postponement of the accrual date for interest.<\/p>\n\n\n\n
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