On June 13th 2018 Chile released its Counter-Memorial in an ICSID arbitration initiated by Carlos and Francisco Rios Velilla (the “Claimants”) under the Colombia-Chile Free Trade Agreement (the “FTA”).
The document has recently been published in the ICSID web site.
In their Memorial the Claimants alleged that Chilean authorities failed to create favourable conditions for the operation of Santiago’s bus system Transantiago by two local companies -Alsacia and Express- in which the Claimants hold 92% of shares.
In its Counter-Memorial, Chile raised two new objections to jurisdiction. Additionally, it responds to the investors’ arguments on the merits and on damages.
Chile´s main defences are the following:
(a) The claimants failed to effectively waive their right to initiate local proceedings, as required under the FTA.
Pursuant to article 9.18(2) of the FTA, investors can only initiate investor-State arbitration if they submit a written waiver of their right to initiate or continue certain local proceedings with respect to the disputed measures. Chile argues that Alsacia and Express are still pursuing proceedings against Chile before local courts and administrative bodies.
(b) The claims are time-barred under the FTA.
Based on article 9.18(1) of the FTA, Chile alleges that no claim may be submitted to investor-State arbitration if more than 39 months have elapsed from the date on which the claimants acquired or should have acquired knowledge of the alleged breach and knowledge of their loss or damages resulting from the alleged breach. According to the respondent, the Claiming are requesting damages from 2012 onward.
(c) No creeping expropriation took place.
Chile argues that the contested measures do not qualify as an expropriation according to the criteria established in Annex 9-C of the FTA
(d) The minimum standard of treatment does not protect legitimate expectations.
Chile alleges that he fair and equitable treatment standard is a provision explicitly linked to the minimum standard of treatment under the FTA, therefore the Claimants cannot claim damages for a violation of their legitimate expectations per se.
(e) Allegations of discriminatory treatment and of failure to provide full protection and security are unfounded.
Chile alleges that it did not discriminate the operation of the Claimant’s investment at any time, or treat the Claimants differently from their competitors.
Chile rejects the Claimant’s allegations that it failed to provide full protection and security to their
investment when it failed to fight fare evasion and vandalism.
Chile notes that the full protection and security standard does not impose an objective responsibility on States to protect investors against any losses which they may suffer from third parties.
The Claimants failed to establish a causal link between the claimed damages and the alleged violations of the FTA.
For further information, please find the Claimant’s Counter-Memorial in the following link:
Spanish version only available: http://icsidfiles.worldbank.org/icsid/ICSIDBLOBS/OnlineAwards/C6427/DS11246_Sp.pdf