Argentina Remains Obligated to Comply with Ruling from BIT Arbitral Award
Pullyin' Up a 25-Year-Old Fight: Webuild Wins Turkey Over Argentina at the ICSID Tribunal
Here we are, another day, another international dispute settled! On the 28th of April, in a decision almost as old as your bustling grandkids, the International Centre for Settlement of Investment Disputes (ICSID) came down on the side of Webuild, formerly known as Salini Impregilo, in their long-winded beef with the Argentine Republic. The bone of contention? Argentina's alleged breach of the 1990 Italy-Argentina Bilateral Investment Treaty (BIT) following Webuild's investment in Puentes del Litoral (PdL), a concessionaire responsible for constructing and operating a toll road and bridge between Rosario and Victoria.
Back to the Beginning
The feud has its roots entrenched in a 1998 concession contract that was part of Argentina's privatization reforms aimed at drawing in foreign investment. Webuild plunked down a hefty $33.2 million in the project and held a 26% stake in PdL. But the project faced a series of hurdles, including delays in government subsidy payments, a collapsed loan agreement with the Inter-American Development Bank, and the enactment of the Emergency Law in 2002, during Argentina's economic crisis. The law de-pegged the Argentine peso from the US dollar, converted public contracts originally made in dollars into pesos, and froze toll rates, gravely impacting the financial well-being of the concession.
Battle of Arguements
Webuild leveled allegations that Argentina did not restore the "economic equilibrium of the concession," stifled investment, and ultimately terminated the concession contract in 2014 without providing fair compensation. It claimed that Argentina violated the BIT in several ways, including failing to uphold the fair and equitable treatment (FET) standard, disregarding anti-discrimination provisions, and engaging in unlawful expropriation. On the other hand, Argentina defended itself by arguing that the financial difficulties faced by PdL were due to Webuild's mismanagement and its inability to secure financing, not state action.
The Initial Verdict
The tribunal handed out its judgment on liability and compensation on the 3rd of March 2023, ruling that Argentina was in the wrong for breaching the BIT's FET standard. It found that Argentina had violated Article 2.2 of the BIT by failing to restore the economic equilibrium of the concession within a reasonable time frame following the resolution of the economic crisis, while also stating that "Argentina behaved in an arbitrary, grossly unfair, unjust, and idiosyncratic manner," particularly in its refusal to renegotiate the concession contract and its termination of the contract in 2014. It dismissed Argentina's defense of necessity, arguing that the measures taken were not the only viable solutions and that Argentina had contributed to the situation through its actions.
Request for Reconsideration
Being the stubborn lot they are, the Argentineans asked the tribunal to reconsider its Decision on Liability, citing a judgment issued on the 27th of June 2024 by the Federal Court on Administrative-Contentious Matters in the PdL Case. This judgment concluded that PdL's financial difficulties were caused by its failure to secure financing, rather than Argentina's actions, and upheld the legality of the concession contract's termination due to PdL's dissolution. Argentina reasoned that the PdL judgment constituted a "new and relevant fact" that warranted reconsideration and claimed that the Tribunal's failure to align its decision with the PdL judgment would exceed its powers under the ICSID Convention and risk annulment of the award.
Webuild vehemently opposed the request, arguing that the tribunal's decision on liability was final and binding under the res judicata principle. It contended that the PdL judgment was irrelevant to the arbitration, as Webuild's claims under the BIT were distinct from PdL's contractual claims in those proceedings. The company maintained that the BIT imposes obligations beyond those of domestic law and that a breach of contract does not necessarily equate to a breach of treaty.
The Final Blow
In a decision that puts the kibosh on Argentina's dreams of weaseling out of this mess, the ICSID panel dismissed Argentina's request for reconsideration in April 2025. They reaffirmed the clear distinctions between the arbitration and the PdL case, emphasizing that Webuild's claims arose under the BIT and were governed by international law, whereas the PdL case involved a different cause of action, brought by a different party, and applied only Argentine law. The panel maintained that Argentina's longstanding failure to restore the concession's economic equilibrium after 2006 was the primary cause of PdL's economic collapse and reiterated its earlier finding that Argentina's conduct violated the FET standard.
The panel awarded Webuild $97.4 million in damages, representing the value of its equity and debt stakes in PdL as of the valuation date of the 31st of August 2014. They also ordered Argentina to pay pre-award interest at a rate of 4% per annum and post-award interest at a rate of 6% per annum, both compounded annually. The total amount due as of the date of the award, inclusive of interest, was $147 million. The panel also made an order regarding costs, ruling that Argentina would have to reimburse Webuild $5.67 million in legal costs and expenses, including $233,282.50 incurred in responding to Argentina's request for reconsideration.
The Key Players
In the dramatic showdown of Webuild v. Argentine Republic, the panel was graced by the presence of Lucinda Low (president), Professor Kaj Hobér, and Professor Jürgen Kurtz.
Webuild was represented by a powerhouse team led by Roberto Aguirre Luzi, Craig Miles, Eldy Quintanilla Roché, Arturo Oropeza Casas, Juan Manuel Poggio Aguerre, and Esteban Sánchez of King & Spalding. The Argentine Republic was represented by its in-house legal team led by Santiago María Castro Videla.
[1] Information regarding specific BIT violation terms and additional details about the original ICSID merits decision can be found in public records analyzed, though they are not discussed in this article. The focus remains on Argentina's obligation to comply with the upheld award.
The ICSID tribunal, comprising of Lucinda Low, Professor Kaj Hobér, and Professor Jürgen Kurtz, ruled in favor of Webuild in their dispute with the Argentine Republic, awarding them $147 million in damages for the breach of the Fair and Equitable Treatment (FET) standard by Argentina. Webuild's legal team, led by Roberto Aguirre Luzi, Craig Miles, Eldy Quintanilla Roché, Arturo Oropeza Casas, Juan Manuel Poggio Aguerre, and Esteban Sánchez, presented arguments against Argentina's alleged violations of the Italy-Argentina Bilateral Investment Treaty (BIT), including failing to restore economic equilibrium, disregarding anti-discrimination provisions, and unlawful expropriation. Argentina, represented by its in-house legal team, argued that PdL's financial difficulties were due to Webuild's mismanagement rather than state action. Despite Argentina's request for reconsideration, the ICSID panel dismissed it, emphasizing that Webuild's claims arose under international law, whereas the PdL case involved Argentine law. This ruling marked a significant victory for Webuild in the investment industry, finance, and business sectors, as it serves as a reminder of states' obligations to uphold treaty commitments in their dealings with foreign investors.
