The 2013/05/13 at 08:20
Valérie Demon, in Madrid
2012 proved to be a record year for court cases between enterprises and State powers, totalling 62. Spain is amongst the countries where the greatest number of claims were lodged in arbitration courts in 2012. Seven disputes oppose Spanish enterprises and States, mostly Latin American. As a result, the Arbitration Court of Madrid, overseen by the Chamber of Commerce and Industry of Madrid, deemed it timely and useful to organise the first Spanish Conference on Investment Arbitration in Latin America.
The one-day event held at the Casa de América in Madrid, gathered some of the biggest Spanish companies listed on the Ibex-35 (the equivalent of the CAC 40), as well as legal and arbitration firms.
“Investment arbitration is a very effective instrument for channelling the demands of enterprises in the Madrid region,” stated Enrique Ossorio, Minister of the Economy for the Madrid region where 16,000 enterprises embarked on globalisation in 2012. Concretely, this form of arbitration enables the finding of solutions when controversies arise between foreign investors and States during expropriations and nationalisations. The most recent case, widely publicised, involved a Spanish enterprise last year when the Argentinian government decided to expropriate Repsol. The controversy is still in the midst of arbitration procedures.
The heads of large companies present shared their views on the current risks of investing overseas. “Experience shows us that treaties on the reciprocal protection of investments between European and Iberian American States (APRIs) are useful in countries where changes in government are frequent,” assures Miguel Klingenberg, General Vice-Secretary of Repsol. These APRIs thus contain controversy-solving mechanisms allowing the investor to take recourse to international arbitration in the event of a dispute. “A country’s desire to adhere to these international treaties is already an indication to us,” points out Rafael Garcia de Diego, Secretary General of the Spanish electricity network Red Eléctrica de España.
José Fernando Cerro, General Vice-Secrretary of Abengoa, does not however share the same opinion: “Thinking that investments will benefit from a secure legal framework because a treaty exists is optimistic even if this remains a useful instrument.” Indeed, a judgment in favour of Abengoa was recently handed down by the ICSID (International Centre for Settlement of Investment Disputes, dependent on the World Bank), in a dispute against Mexico existing since 2009).
The company Albertis also showed overall satisfaction with arbitration. In May 2012, Bolivia decided to freeze the airport fees managed by a subsidiary of Albertis. “Arbitration is the only way to have a legal debate at a certain level. This has not prevented Bolivia from not improving dialogue, but it at least allows an exit from the Bolivian dispute. Our only regret is the slowness of the procedure,” explained Daniel Ventín, Director of Legal Projects at Albertis.
According to several speakers, the decision to turn to arbitration ultimately depends on the global strategy of the private investor. Many companies are drawn to arbitration, but many others do not take the plunge as they need to continue dealings in the country where the dispute has arisen. “The strategy taken depends on the company and its implantation, its economic weight in the country,” considered Rafael García de Diego, of Red Eléctrica de España. Entering the Bolivian market in 2001, the first problems arose in 2006 with the Bolivian State. “But it was impossible to go to an arbitration court; the strategy depends on investment in the end,” continued the company executive.
Meanwhile, the Spanish Minister of Foreign Affairs, José Manuel García-Margallo, present at the inauguration of the Conference, insisted on another aspect of arbitration. He wishes for the emergence of arbitration more adapted to SMEs, to encourage them to globalise with the same legal security. While also wishing for arbitration decisions to be quicker and less costly.