Foley Hoag Secures Victory for Uruguay and Dismissal of Claims by Italba Corporation

March 22, 2019

Uruguay has again defeated a claim by a foreign investor in arbitration proceedings before the International Centre for the Settlement of Investment Disputes (ICSID) in Washington, D.C.

A three-member arbitral tribunal unanimously upheld Uruguay’s objection that Italba Corporation, the U.S. company that brought the arbitration, failed to demonstrate that it owned or controlled Trigosul, S.A., its alleged Uruguayan subsidiary whose telecommunications license was revoked by Uruguayan authorities in 2011.

Uruguay had argued that, because Italba did not own or control an investment in the country, it was not an “investor” under the terms of the Uruguay-United States bilateral investment treaty. The tribunal agreed, and, on that basis, sustained Uruguay’s objection to its jurisdiction and dismissed all of Italba’s claims.

The tribunal also ordered Italba to pay all of Uruguay’s attorneys fees and costs, in excess of $5.8 million.

This was Uruguay’s second arbitral victory in less than three years. In July 2016, Uruguay defeated a claim by tobacco company Philip Morris International that it had breached its treaty obligations by imposing restrictions on the marketing of cigarettes to protect consumers against false claims about the health risks of smoking. Philip Morris was likewise ordered to reimburse Uruguay for its legal fees and administrative costs, in that case for $7.7 million.

In both victories, Uruguay was represented by Foley Hoag LLP.

“It is an honor for Foley Hoag to serve as counsel to Uruguay,” said Paul Reichler, Chair of the firm’s International Litigation and Arbitration Department, and lead counsel for Uruguay in both cases. “There are not many States that can match it in terms of its commitment to the rule of law, its respect for the rights of domestic and foreign investors, and the transparency of its public administration. Whenever it acts, it does so responsibly.”

Foley Hoag’s team of lawyers included partner Clara Brillembourg (who also defended Uruguay in the Philip Morris case), and attorneys Christina Beharry, Ofilio Mayorga, Patricia Cruz Trabanino and Jose Rebolledo.

The firm has represented Uruguay in its international legal disputes continuously since 2006, when it appeared on the State’s behalf before the International Court of Justice (ICJ) in The Hague, in response to a claim brought by Argentina that a paper pulp mill licensed by Uruguay caused environmental damage to a river shared by both countries. In 2010, the ICJ ruled in Uruguay’s favor, finding that the evidence failed to establish any harm to the river.

Foley Hoag specializes in the representation of sovereign States in disputes with other States and foreign investors before international courts and arbitral tribunals. It is consistently ranked in Band One, the highest level, for Public International Law by Chambers Global, which reports: “Foley Hoag LLP stands out because of its high level of competence and admirable record of cases handled and won.”

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