News in Brief

South African trade minister confirms denunciation of EU BITs

South Africa’s Minister of Trade and Industry, Rob Davies, confirmed that his government was terminating investment treaties with Belgium, Luxembourg and Spain because they contained “serious flaws.”

Responding to a parliamentary question on the reason for terminating these agreements, Minister Davies explained that they were “poorly drafted” and “play little, if any, role in investors’ decisions to invest or not in any country.”

Minister Davies explained that South Africa was instead focusing on strengthening its “national investment protection regime.”

In total, South Africa has 13 treaties with EU member states, and ITN understands that the country intends to terminate other treaties, in addition to those with Belgium, Luxembourg and Spain.

The South African government concluded a review of its BITs in 2010, which was largely critical of the approach to treaty-making that followed the country’s democratic transition in 1994.

Renco v. Peru dispute to be transparent and administered by ICSID

An UNCITRAL arbitration involving a US lead producer and the government of Peru will be administered by the World Bank’s International Centre for Settlement of Investment Disputes (ICSID). This marks the first time that ICSID will maintain a procedural record of an arbitration using the UNCITRAL arbitration rules on its website.

The controversial dispute, which pits Renco Group against Peru, centers on a metal smelting and refining business which have left the Peruvian town of La Oroya badly polluted.

It is the first arbitration under the US-Peru Trade Promotion Agreement (PTPA). In accordance with the PTPA’s transparency requirements, the tribunal ‘s first procedural order, dated August 22, 2013, states that hearings will be open and documents related to the arbitration published.

Investors threaten arbitration against Serbia for alleged failures in the provision of land for the construction of a solar park

A group of renewable energy investors has announced that it will file for arbitration against Serbia at The London Court of International Arbitration in a dispute over the world’s largest solar power park, according to the information service Global Arbitration Review.

The investors, Securum Equity Partners, complain that Serbia breached an umbrella agreement concluded between both parties by failing to locate and specify appropriate land for the construction of the OneGiga solar park.

According to lawyers for the investors, the agreement with Serbia stipulated the procurement of at least 3,000 hectares of land, under a minimum sixty-year lease, in an area located no further than one kilometer from an electrical transmission network.

The Serbian government has denied breaching the agreement and accused the investors of bad faith. Serbia asserts it provided the company with 30,000 hectares in total—ten times the amount agreed with investors for developing the project.

In a July 25, 2013, letter to the investors’ law firm, the Serbian State Secretary said the government “has undertaken to use its best efforts and do everything in its powers” to procure suitable land for the construction of the OneGiga Solar Park.

The project, valued at €1.75 billion, was due to be completed by the end of 2015.

Mali faces claim over tax adjustments

Randgold Resources—a company registered in Jersey, Channel Islands—is challenging Mali through international arbitration in a US$ 46.5 million tax dispute.

The company complains that the government of Mali breached an agreement by demanding tax adjustments for the years 2008 to 2010 on the salaries of foreign employees. Société des Mines de Loulo, a subsidiary of Randgold Resources, had its case registered on July 18, 2013, at ICSID.

Reuters has reported that Mali reduced the amount it was claiming in taxes, but failed to reach an agreement with the company. Precious metals mining companies are under pressure to cut costs since prices plunged this year. Randgold announced a 62 per cent fall in second-quarter profit to US$ 54 million and pledged to cut costs, including at its Loulo-Gounkoto mine in Mali.

ICSID updates statistics for 2013 fiscal year

The International Centre for Settlement of Investment Disputes recently released a new edition of its online publication ICSID Caseload – Statistics (Issue 2013-2), providing an overview of the cases registered or managed by the Centre as of June 30, 2013.

The new edition provides an updated profile of the ICSID caseload, historically and for Centre’s fiscal year 2013 (July 1 – June 30).

ICSID registered 14 new cases in the first half of 2013. Last year the Centre registered 50 new cases, the largest number in its history and considerably higher with respect to the previous years (38 cases in 2011, 26 in 2010 and 25 in 2009).

Similar to the past year, in the 2013 fiscal year Eastern European and Central Asian countries topped the list of respondents with 26 per cent of cases, followed by countries in South America (24 per cent) and the Middle East and North Africa (10 per cent). Venezuela faced the highest number of claims, with 9 new cases introduced in 2013, same number of cases as in the 2012 fiscal year.

As in the 2012 fiscal year, the greatest number of cases in the 2013 fiscal year was in the oil, gas, and mining sector.

In the 2013 fiscal year, jurisdiction was granted mainly through bilateral investment treaties (74 per cent), followed by investment law of the host-state (16 per cent), investor-state contracts (8 per cent), and the Energy Charter Treaty (2 per cent). This is close to the historical average of 65 per cent under BITs, 19 per cent under investor-state contracts, 7 per cent under host-state investment law, 4 per cent under the ECT, and 3 per cent under NAFTA.

The ICSID case load statistics are available here: