This article was featured in Jus Mundi‘s 2024 Arbitration Year in Review, in collaboration with VYAPs, a yearly collection of articles from jurisdictions all around the globe updating you on arbitration-related developments from the previous year.
THE AUTHOR:
Renzo Favilla, Legal Counsel at the National Directorate of International Affairs and Disputes of the Argentine Treasury Attorney General’s Office
Introduction
In 2024 the Argentine Congress enacted Law No. 27,742 of Basis and Points of Departure for the Freedom of Argentines (Ley de Bases y Puntos de Partida para la Libertad de los Argentinos in Spanish) containing a series of reforms to different aspects of the Argentine regulatory framework, including matters of taxation, labor, mining, energy, among others.
This law also created a regime for the promotion of large investments (Régimen de Incentivo para Grandes Inversiones – “RIGI” after its acronym in Spanish) to provide tax, customs, and incentives for investments over USD 200.000.000 in specific economic sectors designated by law, which must meet minimum thresholds in terms of amounts invested. Among its objectives are the ‘promotion of economic development’ and to ‘encourage significant national and foreign investments in the Argentine Republic to ensure the country’s prosperity’ (Article 166, Law No. 27,742). The regulations that apply to RIGI also include the Decree 749/2024, designating the Ministry of Economy as the Enforcement Authority and determining the procedures to the access to the regime, and Decree 1028/2024.
According to the Ministry of Economy, ‘RIGI is a long-term tool for new projects or expansions of pre-existing projects that represent significant investments for the national economy that would otherwise not be developed.’ (Press Release of the Ministry of Economy, January 2025).
Under RIGI, a Special Purpose Vehicle (“SPV”), may submit a project to enter the regime and, once approved by the Enforcement Authority, grants the rights established in Law No. 27,742. The RIGI also establishes sanctions and penalties for SPVs that do not comply with the requirements, for example, for omissions or inaccuracies in the information submitted to the Enforcement Authority, or for failing to make the investments in the time frame set.
Dispute Settlement in the RIGI
In addition to the substantive benefits granted to SPVs, Law No. 27,742 determines that all disputes between the National State and SPVs in connection to an approved investment shall be resolved by arbitration, or other dispute settlement mechanisms.
Cooling-Off Period
According to regime, the parties shall resolve the dispute, in a first instance, ‘through consultations and friendly negotiations’ (Article 221, Law No. 27,742) during a cooling-off period of sixty days from the date of the SPV’s trigger letter, which shall be directed to the Enforcement Authority with copy to the Treasury Attorney General´s Office of Argentina. This tier is commonly included in dispute settlement mechanisms of investment legislation of other States, such as Sierra Leone, Rwanda, or Belarus.
Dispute Resolution Avenues
Without entering into the debate of the consent to arbitration, the regime provides that if the dispute cannot be resolved amicably, three arbitration alternatives are present. According to the dispute settlement provisions in RIGI, the avenues indicated are:
- Arbitration under the Permanent Court of Arbitration (PCA) Arbitration Rules (2012) ;
- For the SPV or the SPV’s foreign partners or shareholders, the International Chamber of Commerce (ICC) Arbitration Rules (2021) excluding expedited arbitration;
- For the SPV’s or the SPV’s foreign partners or shareholders, the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (1965) (ICSID Convention), in accordance with the currently in force ICSID Arbitration Rules (2022) or, if applicable, the ICSID Additional Facility Arbitration Rules (2022);
- Other project-specific dispute resolution mechanisms agreed with the SPV in the administrative act approving the application for adhesion and the investment plan.
The latter option was complemented by Annex I of the Decree 749/2024, which creates the RIGI Panel, a panel with jurisdiction to resolve disputes arising out of the RIGI. The panel shall follow the procedural rules established in this complementary decree and it consist of three professionals belonging to the fields of engineering, economics, and at least one legal professional. These professionals must be selected from a roster of qualified individuals maintained by the Enforcement Authority.
References to arbitration alternatives like those provided in the RIGI are not uncommon internationally. Many national investment laws have also alluded to arbitration, including ICSID arbitration, as in the cases of Albania and Egypt.
Seat of Arbitration and Other Procedural Rules
The RIGI’s arbitration alternatives shall follow a set of procedural rules established under the regime:
- Except in the case of arbitration under the ICSID Convention, the arbitral tribunal or the arbitral institution, as applicable under the relevant rules, shall determine the seat of arbitration, which must be outside of Argentina and in a country that is a party to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958) (“New York Convention”).
- Regarding the arbitral tribunal itself, it shall have three members, none of whom may be nationals of Argentina or the home state of the majority shareholder of the SPV;
- In respect of the language of the proceedings, the arbitration shall be conducted in Spanish, except in cases of ICC and ICSID arbitration, where it may be conducted in either Spanish or English;
- As regard to costs, Annex I of the Decree 749/2024 establishes that each party shall bear its own costs incurred in the dispute resolution proceedings and, if applicable, the parties shall share equally the costs incurred in connection with the RIGI Panel dispute resolution process.
Applicable Law
In accordance with article 131 Annex I of Decree 749/2024, the law applicable to any dispute shall be Argentine law.
Investment Treaties
Article 135 of Annex I of the Decree 749/2024, regulates the right of Argentina to consolidate two or more proceedings, it includes the consolidation of different proceedings related to the same SPV under dispute resolution alternatives provided in Law No. 27,742, and specific rules of consolidation for proceedings pursuant treaties of reciprocal promotion and protection of investments and those established in the Law No. 27,742.
The RIGI framework also provides that ‘the rights and incentives acquired under the terms and conditions of this regime are considered protected investments within the meaning of treaties on the promotion and reciprocal protection of investments.’ (Article 222, Law No. 27,742). In that regard, article 136 of Annex I of the Decree 749/2024 clarifies that ‘no investment is deemed to be protected under investment promotion and protection treaties until the application for adhesion to the RIGI and the investment plan have been approved and to the extent and scope set out in the applicable investment promotion and protection treaty.’
Conclusion
The RIGI framework represents an innovation in Argentina’s approach to dispute resolution, as the Law No. 27,742 includes provisions specifically regulating mechanisms to address this type potential complex disputes. According to the Ministry of Foreign Affairs, as of August 2024, ‘announcements have been made of investments that could adhere to the [RIGI] and which total 39 billion dollars, mainly in infrastructure, mining, and oil and gas’ (Press Release of the Ministry of Foreign Affairs, August 2024). Accordingly, in late 2024, Argentina kick started with RIGI adhesions (Press Release of the Ministry of Economy, October 2024). Therefore, the recent development and implementation of this regime, along with its dispute resolution provisions, will be closely monitored moving forward.
ABOUT THE AUTHORS
Renzo Favilla serves as Legal Counsel in the National Directorate of International Affairs and Disputes at the Argentine Treasury Attorney General’s Office. He has experience in investment and commercial arbitration proceedings under the ICSID, PCA, and UNCITRAL Rules. Renzo earned his law degree from the Universidad Nacional de Rosario and pursued postgraduate arbitration-related studies at Universidad Austral, Universidad Católica Argentina, and Columbia University.
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