Foley Hoag Helps Uruguay Win Another Investment Arbitration

August 06, 2020

A unanimous arbitral tribunal has dismissed a US$4 billion claim against Uruguay over a failed mining investment, upholding the State’s jurisdictional objections. The tribunal ordered the UK claimants to pay Uruguay US$4 million in attorney’s fees and costs.

The decision, in Mehta, et al. v. Uruguay, handed down on August 6, 2020, represents Uruguay’s third consecutive victory in investment arbitration cases. In all three cases, Uruguay’s legal counsel was Foley Hoag LLP, based in Washington, DC. The two prior cases were Philip Morris International v. Uruguay, decided in 2016, and Italba Corporation v. Uruguay, decided in 2019. 

The most recent case involved an iron ore mine that would have been the largest in Uruguay’s history. Uruguay contended that the mine failed for financial and technical deficiencies attributable to the investor, while the investor blamed Uruguay’s adoption of a new mining code. The tribunal did not reach the merits, because it found that the claimants were not the owners of the project, but mere discretionary beneficiaries of a trust that held the shares in the parent company, and neither the parent company nor any of its subsidiaries had UK nationality. They thus lacked standing to invoke the protections of the investment treaty between Uruguay and the UK.

Uruguay’s lead counsel, Paul Reichler, who co-chairs Foley Hoag’s International Litigation and Arbitration Department, said the award has broad significance because “it holds that you have to be an owner of the investment in order to benefit from the investment treaty; holding a mere economic interest in the project, especially a contingent one, is not enough.” Reichler added: “Uruguay has a perfect record in investment arbitrations because it is steadfastly committed to the rule of law in its treatment of both foreign and national investors.”

Foley Hoag partner Clara Brillembourg called this “an important victory for Uruguay. It ends a case that never should have been brought and preserves billions of dollars of Uruguay’s resources at a time when it, like most nations, needs to protect the health and welfare of its people.”

Other members of Foley Hoag’s legal team were Derek Smith, Tafadzwa Pasipanodya, Diana Paraguacuto-Mahéo, Christina Beharry, Diego Cadena, Madeleine Rodríguez, Yuri Parkhomenko, Joseph Klingler, Alejandra Torres Camprubí, Elisa Méndez Bräutigam, and Henrika Missick de López.

The case was administered by the Permanent Court of Arbitration, with a three-member tribunal consisting of Andres Rigo Sureda of Spain as President, and Professor Pierre Mayer of France and Judge Thomas Johnson of the United States as co-arbitrators.

Click here for Spanish version.