Vercara (formerly Neustar) v. Colombia (ICSID Case No. ARB/20/7)

Introduction and background

On September 20, 2024, the tribunal issued its award in Vercara (formerly Neustar) v. Colombia. The claimant is Neustar Inc., incorporated under the laws of Delaware, and the respondent is the Republic of Colombia (“Colombia”). The dispute concerned Colombia’s decision not to extend a concession agreement for administering the country’s “.co” domain name, a country code top-level domain that has gained significant commercial value globally as an alternative to “.com.”

In 2009, Colombia’s Ministry of Information Technology and Communications (MinTIC) awarded a 10-year concession to .Co Internet, with the agreement stating that “the agreed term may be renewed in the manner and terms established by the legislation in force at the time of the renewal.” In 2014, Neustar purchased all shares in .Co Internet.

As the concession approached its end in February 2020, Neustar claimed it had a right to a 10-year extension based on Colombian Law 1065 of 2006. Colombia instead conducted a new tender process announced by the President, prompting Neustar to file both domestic proceedings seeking preliminary measures and an ICSID claim under the U.S.–Colombia Trade Promotion Agreement (“TPA”).

Neustar ultimately participated in and won the new tender through .Co Internet but under significantly different financial terms (19% versus previous 93%–94% revenue share). During the arbitration, Neustar underwent corporate restructuring, transferring its arbitration claim to Security Services (later renamed Vercara), raising additional jurisdictional questions.

Tribunal’s reasoning—Jurisdiction

The tribunal first dealt with seven objections to jurisdiction raised by Colombia.

Fork-in-the-road clause, lack of crystallized dispute, faulty waiver

First, regarding the fork-in-the-road provision in Annex 10-G TPA, the tribunal found that despite factual overlap, Neustar’s claims before Colombia’s Consejo de Estado and the ICSID tribunal differed substantively. The Colombian proceedings sought interim relief under domestic procedural law, while the arbitration addressed TPA violations (paras. 220–231).

Second, the tribunal rejected Colombia’s claim that Neustar failed to meet procedural prerequisites under Art. 10.16 TPA, finding clear evidence of a dispute in the parties’ communications and a compliant notice of intent (paras. 233–240 and 254–258).

Third, on the waiver obligation under Art. 10.18(2) TPA, with Colombia stating that Neustar had only waived access to Colombian courts and contradicting the waiver by initiating domestic proceedings for preliminary measures, the tribunal determined that Neustar’s waiver covered all forums and that requests for preliminary measures were explicitly permitted under the TPA (paras. 259–261 and 270–279).

Lack of standing due to sale, bad faith, and abuse of process

Fourth, regarding Neustar’s standing after selling .Co Internet to GoDaddy and Colombia asserting that it was required to own the investment at the time of initiation of the arbitration, the tribunal concluded that a legal dispute existed at the time of the notice of intent and request for arbitration (RFA) and that the sale in August 2020 occurred after the arbitration’s initiation in March 2020 when ICSID registered the RFA, thus having no effect on standing (paras. 310–331).

Fifth, the tribunal dismissed Colombia’s allegations of bad faith and abuse of process, finding no evidence of corporate restructuring to secure jurisdiction or undue pressure on Colombian authorities to renew the contract and not proceed with a new tender process. The restructuring with the sale of .Co Internet did not change any rights existing at the time the RFA and the claim was filed. Regarding undue pressure, the claimant initiated the Consejo de Estado and the arbitration proceedings in line with the dispute resolution clauses in the TPA and the 2009 contract, exercising the legal and contractual rights to which it was entitled (paras. 353–376).

Contractual vs. treaty claims

Sixth, on whether Neustar’s claims were contractual rather than treaty-based as claimed by Colombia, the tribunal determined that the real essence of the claims was investment related for several reasons: the 2009 contract concerned the .co domain (a public asset regulated by MinTIC); it formed the foundation of Neustar’s broader investment in Colombia, which grew substantially over the years; and MinTIC acted in its sovereign capacity, not merely as a commercial party by informing the President of Colombia of its decisions in respect to the concession and him announcing the initiation of a new tender process, and because there were continual direct and indirect government interventions in the rights and options of .Co Internet, such as the exclusion of .Co Internet in the attendance of the Advisory Committee on the country code top-level domain through the adoption of a new resolution (paras. 398–422).

Assignment of arbitration claim and unsuccessful unilateral withdrawal

Finally, Colombia objected that Neustar improperly transferred its arbitration claim to Security Services (now Vercara) without establishing validity under Delaware and international law and without Colombia’s consent (paras. 424–434).

The tribunal first established that Neustar and Security Services were distinct legal entities, not merely a name change as initially claimed. This conclusion was based on the unit purchase agreement and bill of sale between the companies as separate entities registered under Delaware law with different file numbers. Thus, the claim was transferred as part of a corporate “spin out” (paras 481–490).

Under Delaware law, the tribunal examined the doctrine of champerty, finding the assignment valid because of the close relationship between the companies, with Security Services being fully owned by Neustar at the time of the transaction (paras. 491–498).

However, regarding the validity under international law, the tribunal determined that the respondent state’s consent is required when substituting a claimant. Security Services/Vercara was not party to the original arbitration agreement between Neustar and Colombia. The tribunal emphasized that Colombia’s consent to arbitration was based on the proceedings being validly commenced under Art. 10.16 TPA with appropriate notices to both Colombia and Neustar. Without Colombia’s express consent, the transfer was invalid under international law (paras. 499–518).

The tribunal rejected Neustar’s argument that the transfer constituted a discontinuance under ICSID Arbitration Rule 44, noting that Neustar initially claimed a mere name change and only later argued lack of jurisdiction after transferring rights to Security Services (paras. 519–520). The tribunal concluded that Neustar’s actions amounted to an attempt to unilaterally withdraw consent from arbitration, which is prohibited under Art. 25 ICSID Convention. Therefore, Neustar remained the proper party to the proceedings, and the tribunal maintained jurisdiction over it (paras. 521–526). The tribunal found that it has jurisdiction over Neustar but not over Vercara.

On liability

Neustar alleged that Colombia violated its obligations under the TPA and customary international law. The main claims put forward were that Colombia violated the FET and discriminatory clauses of the TPA and failed to protect Neustar’s investments against unreasonable measures in violation of Art. 4(1) of the Swiss–Colombia BIT applicable through the MFN clause in the TPA. Colombia disagreed with these allegations of breaches and violations of the TPA and the Swiss–Colombia BIT, as well as its applicability in these circumstances.

FET

Neustar claimed Colombia breached the FET provision in Art. 10.5 TPA by failing to negotiate a concession extension, lacking transparency, acting discriminatorily, and frustrating legitimate expectations.

The tribunal acknowledged that the customary international law minimum standard of treatment has evolved beyond the Neer case but emphasized that the threshold remains stringent (paras. 600–606). It concluded that Neustar failed to meet this high threshold for proving an FET violation (paras. 608–609).

The tribunal rejected Neustar’s claims for four key reasons. First, MinTIC had no contractual or legal obligation to negotiate or extend the 2009 contract, as both legal and contractual provisions presented extension as merely optional. Second, Neustar’s own submitted reports didn’t support its position or indicate the concession should be extended. Third, Colombia’s new tender process was justified by legitimate policy objectives and market conditions, supported by expert reports highlighting the need for better economic terms. Fourth, Neustar provided no evidence of discrimination, as other concession extensions involved different circumstances (paras. 617–634).

Additionally, the tribunal found no bad faith in Colombia’s actions. The tender process followed proper legal requirements, with public hearings and consideration of .Co Internet’s observations. Notably, Neustar participated in and ultimately won this new concession (paras. 637–639).

The tribunal also dismissed claims of due process violations and breach of legitimate expectations, noting that Colombia followed proper procedures and that renewal was clearly presented as only a possibility in both the contract and applicable law (paras. 642–646).
The tribunal, therefore, rejected all FET claims, concluding Colombia had no obligation to negotiate or extend the 2009 Contract (para. 648).

Discrimination—MFN and NT

The tribunal evaluated Neustar’s claims under TPA Art. 10.3 and 10.4 TPA (non-discrimination provisions), which require proving like circumstances, less favourable treatment, and lack of justification (paras. 689–690).

The tribunal concluded Colombia’s actions did not constitute discriminatory “treatment” under the TPA because the decision not to renew was discretionary; accordingly, the lack of negotiation and alleged absence of “rational policy” stemmed from MinTIC’s legitimate decision not to renew; MinTIC’s freedom of contract is protected under Colombian law; the tender process followed legal requirements after the 2009 contract’s expiration; and Neustar was invited to participate (paras. 698–704).

Even if these actions qualified as “treatment,” Neustar failed to prove discrimination. No evidence showed Colombia’s decision was based on Neustar’s nationality or that others received preferential treatment. Other renewed concessions involved television and radio sectors, which represented different circumstances from domain registry that justified different approaches (paras. 705–706).

MFN import of Art. 4(1) Swiss–Colombia BIT

The tribunal considered whether Neustar could use the MFN clause in Art. 10.4 TPA to import a broader FET standard from the Swiss–Colombia BIT to replace Art. 10.5 TPA’s more limited provision.

Applying Art. 31 VCLT, the tribunal found that the TPA parties clearly intended to establish the lower customary international law minimum standard through Arts. 10.4 and 10.5 rather than a higher autonomous standard. Neustar failed to prove that the contracting parties intended to allow bypassing this more restrictive FET standard through the MFN clause (paras. 725–728).

The tribunal added that even if MFN importation were possible, Neustar’s claims would still have failed for the same reasons discussed in the earlier FET and discrimination analyses (para. 729). All claims on the merits were, hence, rejected (para. 738).

Costs

On costs, the tribunal ordered an equal split of the USD 829,127.95 in arbitration expenses, with each party also bearing its own legal fees (paras. 736–737). Since both parties had already advanced funds in equal portions, this decision meant each was responsible for USD 414,587.98 of the arbitration costs.

Conclusion

The Vercara (formerly Neustar) v. Colombia case recognizes a state’s autonomy in contractual matters with foreign investors. The tribunal clearly established that governments maintain discretion over contract renewal decisions when legal frameworks present them as optional, not obligatory. This strengthens developing countries’ regulatory space when structuring concession agreements. Further, the ruling on the ICSID claim assignment highlights a critical procedural safeguard: investor–state arbitration claims cannot be unilaterally transferred to new entities without the respondent state’s consent. This protection prevents corporate restructuring from complicating ongoing proceedings. Finally, the case shows how properly documented policy rationales and transparent procedures can shield states from liability even when making decisions that adversely affect foreign investors for the benefit of the state.

Note

The tribunal was composed of Kaj Hobér (Swedish national, appointed by the claimant), Yves Derains (French national, appointed by respondent) and Julian D. M. Lew (British/Israeli national, President).

Author

Emil Alicevic holds a Bachelors of Law (BLaw) from the University of Zurich and is currently enrolled in a double degree program between the University of Zurich and the University of Amsterdam, where he is an LL.M. candidate in international trade and investment law.