Investment Arbitration Reporter

By Luke Eric Peterson

The Plurinational State of Bolivia has asked a U.S. Federal Court to enjoin an arbitration proceeding brought by a Dutch subsidiary of Telecom Italia under the Netherlands-Bolivia bilateral investment treaty (BIT).

Bolivia contends that a former Minister in charge of “Legal Defence” exceeded her authority when she agreed last year to the discontinuation of an arbitration pending at the International Centre for Settlement of Investment Disputes (ICSID), and the submission of the same dispute to an identical panel of arbitrators operating under ad-hoc procedural rules.

Bolivia’s efforts to enjoin the ad-hoc proceeding – and to pursue criminal proceedings against the former Minister – reflect an increasingly antagonistic posture towards international arbitrations initiated under the country’s myriad investment protection treaties.

In a Complaint filed on October 5, 2010 with the U.S. District Court in the District of Columbia, Bolivia contends that former officials were acting beyond their authority when they permitted the ETI arbitration to be moved outside of the ICSID and to waive various long-standing jurisdictional objections to the claim.

With arbitral hearings looming at the end of October, Bolivia is hoping that a U.S. Judge will enjoin the arbitral proceedings.

The move by Bolivia is the latest signal of a harder-line strategy in its various international arbitrations with foreign investors.

Bolivia was the first nation to denounce the ICSID Convention in 2007, citing various concerns with the fairness and legitimacy of the ICSID process. When ETI sought to sue Bolivia at ICSID in 2007, the government signalled that it would participate in the process in order to argue that the Centre lacked jurisdiction over Bolivia following the country’s withdrawal. (Views have differed as to the effects of Bolivia’s withdrawal in light of the fact that the country continues to be bound by a number of bilateral investment treaties which offer arbitration under ICSID auspices.*)

When word emerged in late 2009 that the ETI v. Bolivia claim had been removed from the ICSID, in order to be arbitrated under ad-hoc auspices, it appeared that both parties were side-stepping a needless jurisdictional battle over the effects of Bolivia’s denunciation of ICSID.

However, not long after this decision to shift the ETI v. Bolivia arbitration to an ad-hoc process, high-level Bolivian government officials signalled their displeasure at the move.

On November 10, 2009, the National Council for the State’s Legal Defence issued a declaration indicating that it viewed the settlement of the ICSID case and the submission to ad-hoc arbitration to have been unauthorized. Minister for Legal Defence, Maria Cecilia Rocabado Tubert, was later sacked, and faced legal action within Bolivia. The government also parted ways with its former outside legal advisers, Foley Hoag, at the end of 2009 when the firm’s existing contract expired – further hinting at a new harder-line policy with respect to international arbitration.

A copy of the Complaint is available on the IAReporter website: http://www.iareporter.com/downloads/20101010


* See item #1 in this PDF file for further discussion of the effect of Bolivia’s withdrawal: http://www.iisd.org/pdf/2007/itn_nov15_2007.pdf

Investment Arbitration Reporter is a specialized news publication tracking developments in the area of international investment law and policy.

The publication does not offer legal or financial advice or recommendations of any kind.
 
To offer news-tips or comments, email the Editor, Luke Eric Peterson, at: editor@iareporter.com