ICSID Ad Hoc Committee Decides Favorably to Chile -Advised by Carey- on Annulment Remedy in the Oldest Case of the Entity
January, 2013 - Santiago, Chile
After a battle of 15 years, the ICSID decided favorably to Chile on the annulment remedy filed by the Republic against the award that granted Víctor Pey Casado and Fundación Salvador Allende a compensation of USD$ 10 million, plus interests.
The trial, which is the longest and one of the most complex cases on ICSID’s history, was initiated by Víctor Pey Casado and Fundación Salvador Allende requesting compensation for the expropriation of the Clarín newspaper, which was executed during Pinochet’s dictatorship in Chile. Initially, the claim -which is the largest ever brought against the Chilean Republic- requested compensation for USD$ 515 million, which was then increased to USD$ 797 million. The award only granted compensation for USD$ 10 million, based on an alleged discrimination as a result of Chile’s compensation to the successors of several individuals who claimed interests in Clarín, but failing to similarly compensate Mr. Pey.
The Republic of Chile filed an annulment remedy against said award, claiming among others that the arbitral panel had violated basic rules of the proceeding, not giving the parties the chance to present and refute arguments related to the damages requested in connection with the alleged discrimination and denial of justice.
The award by the ad hoc committee agreed with Chile’s remedy, thus partially annulling the ruling rendered by the ICSID arbitral panel, specifically the part that granted compensation for USD$ 10 million. As the annulment award only refers to the compensation in connection with the alleged discrimination and denial of justice, it maintains those considerations that rejected the claims related to expropriation included in the original judgment. Additionally, the ad hoc committee decided that the BIT between Spain and Chile did not apply to issues occurred before its subscription, thus any compensation had to refer to facts after 1994.
At the request of the President of the Republic, Carey has been advising the Republic of Chile ad honorem for the past decade, leading the team senior partner Jorge Carey and litigation partner Gonzalo Fernández. Also, the Chilean defense has been advised by Arnold & Porter, lead by partner Paolo di Rosa, and by attorneys from the Government, lead, in the last period, by the Vice-president of the Foreign Investment Committee, Matías Mori, among several others.
Carey’s partner Gonzalo Fernández emphasizes that “this award is an outstanding victory, not only for the result itself, but also because it is very unusual for an ad hoc committee of the ICSID to annul a previous judgment. The award annulled the only section of the original ruling that granted the defendants compensation, for considering that there were violations to the Republic of Chile’s right to be heard on an issue that was relevant for the outcome of the trial”.
Carey advised the Republic of Chile through a team led by partners Jorge Carey and Gonzalo Fernández.
Counsel to the Republic of Chile:
Matías Mori, Vice-President of the Chilean Foreign Investment Committee.
Arnold & Porter, lead by partner Paolo di Rosa.
Carey, lead by partners Jorge Carey and Gonzalo Fernández.
Counsel to Víctor Pey Casado and Fundación Salvador Allende:
Garcés y Prada, Abogados, lead by partner Joan E. Garcés.
Gide, Loyrette, Nouel, lead by partner Carole Malinvaud.
Date of completion:
December 19, 2012.
