A legal team from Foley Hoag LLP has secured a consent award for the Republic of El Salvador that settles a long-lasting dispute with Italian energy company Enel Green Power S.p.A.
Foley Hoag helped negotiate the agreement that enabled El Salvador to recover ownership of its geothermal power assets. The agreement enabled El Salvador to purchase all of Enel's shares in the jointly owned company tasked with developing geothermal energy in El Salvador. The Foley Hoag legal team involved in the ICSID arbitration consisted of Luis Parada, Derek Smith, Alberto Wray, Erin Argueta, Gisela Paris, Oonagh Sands and Christina Beharry. They worked alongside the Attorney General of El Salvador and other attorneys from his office, as well as with local Salvadoran counsel Saenz & Asociados. Luis Parada participated in the negotiations, and Christina Beharry assisted with valuation issues for the settlement.
The disagreement between Enel and Government-owned entity CEL stretched back to 2008 and arose over control of the joint venture company, which received the concession to develop geothermal power in El Salvador. Geothermal power accounts for over 20 percent of electricity generation in El Salvador, and has significant potential for substantial growth. That potential had been paralyzed since the dispute arose.
Foley Hoag began working with El Salvador in 2013, after an international commercial arbitration initiated by Enel against CEL in 2008 failed to end the dispute, and Enel initiated arbitration against El Salvador under the International Center for Settlement of Investor Disputes (ICSID) Convention. The firm helped negotiate a framework agreement, signed in Dec. 2014, that allowed El Salvador to purchase back Enel’s shares in the joint venture. It also played a significant role in implementing other parts of the agreement. On August 31, 2015, the parties informed the ICSID tribunal that the relevant conditions in the agreement had been met and requested termination of the arbitration. The consent award was released to the Parties on Sep. 14, 2015.
“The Foley Hoag team understood that even winning this arbitration would not have achieved El Salvador's strategic objective of recovering ownership of its geothermal power,” said partner Luis Parada. “The conclusion of this international dispute through a negotiated solution demonstrates our attorneys' ability to understand the long-term objectives of our clients, and to switch from litigators to negotiators to secure our clients' objectives. The negotiated solution was a win-win for both parties.”