Quiborax claim against Bolivia continues; may provide first decision on effects of ICSID exit

By Fernando Cabrera

November 3, 2009

Chilean Química e Industrial del Bórax Ltd. (“Quiborax”) will continue with its claim against Bolivia at the International Centre for Settlement of Investment Dispute (“ICSID”), despite reports of a settlement agreement and Bolivia’s renunciation of the ICSID Convention. The case will likely shed the first light as to the effects of renouncing the ICSID Convention, a controversial topic over which no tribunal has yet to rule.

As reported previously by Investment Treaty News, Quiborax filed for arbitration in October of 2005 alleging that Bolivia had expropriated its property, after Bolivia rescinded the company’s mining concession in Salar de Uyuni (southern Bolivia) in 2004. The ulexite mineral concession was being exploited through Quiborax’s majority owned subsidiary, Non Metallic Metals.

The company is seeking US$ 40 million in compensation for the alleged violations of the Bolivia-Chile Bilateral Investment Treaty.  Bolivia contends that it rescinded the concession because the company withheld information from customs officials, including the volumes of the mineral ulexite it was exporting, in order to evade taxes.  Quiborax disputes this and instead argues that its license was rescinded due to anti-Chilean sentiments which swelled in Bolivia in 2003. Bolivia and Chile have had troubled relations since Chile blocked Bolivia’s access to the Pacific in 1879.

The proceeding was suspended in May of 2008 while the parties sought a negotiated settlement, but negotiations fell through and the arbitration was continued earlier this year with tribunal’s issuance of a procedural order that has yet to be made public.

On September 8, 2009 Bolivian newspaper La Prensa reported that the parties had reached an agreement under which the firm would withdraw its claim at ICSID and in return be allowed to participate in future national tenders (presumably for mineral concessions).  The paper quoted the Minister for Legal Defence of the State Hector Arce Zaconeta as saying that “it is a mutual agreement that has been in the works, through which the company has to give up any financial compensation and the company, of course, will be empowered to participate as any other company on equal terms.”

Yet the reports appear to have been premature as Quiborax filed its memorial on the merits of its claim with ICSID on September 14 and then filed a request for provisional measures the following day. A further request for provisional measures was filed by the company on October 2.

Bolivia renounced the ICSID Convention in 2007 and has argued that it is no longer subject to the centre’s jurisdiction, though the Quiborax claim pre-dates Bolivia’s renunciation. Bolivia’s renunciation, along with Ecuador’s more recent renunciation of the ICSID Convention, has attracted the attention of the arbitration community, in which there is disagreement regarding the implications of renouncing the Convention.

The Quiborax case could be the first to rule on the effects of renouncing the ICSID convention as no tribunal has yet to rule on the topic.

See previous reporting by ITN:

“Chilean chemical firm launches ICSID suit against Bolivia”, By Damon Vis-Dunbar and Luke Eric Peterson, Investment Treaty Newsletter, March 14, 2006, available at: http://www.IISD.org/pdf/2006/itn_mar14_2006.pdf


Other Sources:

“La empresa chilena Quiborax decide continuar con el arbitraje en contra de Bolivia,” October 2, 2009 (Agencia EFE)

“Gobierno afirma que existe un acuerdo verbal con Quiborax,” September 12, 2009 (La Prensa)