Arbitration tribunal refuses to suspend Bolivia claim over pandemic
A tribunal at the Permanent Court of Arbitration has refused to extend a deadline for Bolivia to submit its statement of defence in an investment treaty claim, after the state argued that the coronavirus pandemic had made work on the submission “virtually impossible.”
In an order issued on 10 April, a panel chaired by Bulgarian arbitrator Stanimir Alexandrov said that although the pandemic had undoubtedly created challenges for the parties, the filing of a written statement of defence was still “feasible”.
The tribunal, which also includes Argentine arbitrator Guido Santiago Tawil and Antonio Moreno Rodríguez of Paraguay, noted that participants in other arbitral proceedings have shown a willingness to adjust to the “new reality”.
The panel is hearing a claim brought by the estate of US national Julio Miguel Orlandini Agreda and Compañía Minera Orlandini (CMO), a Bolivian company in which he held the majority stake. The arbitration is seated in Paris and is being conducted in Spanish and English.
The claim has been brought under the US-Bolivia bilateral investment treaty and concerns various mining concessions held by CMO in the municipality of Antequera in western Bolivia. It continued after the death of Orlandini last year.
Orlandini’s estate and the other claimants are represented by Quinn Emanuel Urquhart & Sullivan and Bolivian firm Wayar & von Borries Abogados; while Bolivia is using Dechert and state lawyers.
In March, Bolivia applied for a suspension of the deadline to submit its statement of defence – which is 6 May – on grounds of force majeure in relation to the coronavirus pandemic.
Bolivia cited measures taken by its own government as well as those of France and the US – where Dechert’s Washington, DC office had been forced to close.
The state said the preparation of its statement of defence had already been adversely impacted by the resignation of President Evo Morales in November and that the various measures implemented by countries in response to covid-19 had rendered work on the submission “virtually impossible.”
Bolivia said that its own policy of “mandatory confinement” had prevented it from conducting a public bidding process for expert witnesses and meant it was unable to instruct any before the deadline. The lockdown and travel restrictions have created difficulties in liaising with experts and witnesses, the state argued, some of whom are “elderly individuals often unfamiliar with the technology required to work at a distance.”
The restrictions had also “materially impacted” the working conditions of its counsel Dechert, as had the ill health of certain firm members “potentially due to coronavirus.”
Bolivia said that it would continue making its best efforts to submit its statement of defence by the original deadline but warned that the present uncertainty caused by covid-19 made it impossible to commit to this. It said that the “proper course of conduct would be for the proceedings to be suspended” for the time being.
The claimants disputed that a force majeure event has taken place and said that the grounds invoked by Bolivia are similar to those invoked in previous requests it has made to extend deadlines, “now dressed in covid-19 clothing.”
They argued Bolivia had failed to prove the spread of covid-19 was “unforeseeable” as it has been known to governments since January. They also said the pandemic was not an “irresistible force” that would make it impossible for the state to file its submission, noting that the quarantine in Bolivia has exceptions for public institutions and that communications in the country continue to operate.
Electronic submissions were possible and Dechert is currently providing “uninterrupted service” to its clients, they argued.
The claimants said if the proceeding was suspended it could “affect the entire international arbitration system,” as it could set a precedent about the obligations of states in pending treaty cases during the pandemic.
In its order, the tribunal noted that Bolivia had already requested various extensions in the proceeding, one of which it granted. While it had no doubt the state and its counsel were acting in “good faith,” the tribunal said that Bolivia has already had an “extended period” to prepare the submission.
Although the pandemic has “created a new reality,” the tribunal said “practice shows that in most cases the participants in the proceedings have been able to adjust”.
Numerous challenges have presented themselves, particularly in the context of holding in-person hearings, but the tribunal said “the question here relates to the filing of a written submission.” It recognised that while the pandemic may still cause difficulties interacting with witnesses and experts, filing the submission was still “feasible.”
The tribunal said it was “comforted” by other arbitrations where there have been delays “but the proceedings have not been suspended or ruled impossible to continue.”
In that context, the tribunal said it did not need to rule on the existence of force majeure as a legal matter.
Last year, the tribunal dismissed Bolivia’s request to terminate the proceedings on the grounds that Orlandini, his successors and CMO do not fulfil the requirements to bring the claim.
It also rejected the state’s request to trifurcate the proceedings on jurisdiction, liability and quantum, instead bifurcating into the pending state on jurisdiction and liability and, if necessary, a further stage on damages and quantum.
In an article published by Latin Lawyer last month, Chaffetz Lindsey partner Aníbal Sabater said that the effects of covid-19 on Latin American investment arbitrations were already being felt – noting that Guatemala had just applied to a federal court in Washington, DC, to stay enforcement of the International Centre for Settlement of Investment Disputes (ICSID) award in Teco v Guatemala as the country says it cannot be deprived of the resources necessary to fight the virus.
The Estate of Julio Miguel Orlandini-Agreda and Compañía Minera Orlandini v The Plurinational State of Bolivia (PCA Case No. 2018-39)
Stanimir Alexandrov (Bulgaria) (chair)
Guido Santiago Tawil (Argentina) (appointed by claimants)
Jose Antonio Moreno Rodriguez (Paraguay) (appointed by Bolivia)
Counsel to the Estate of Julio Miguel Orlandini-Agreda and CMO
Quinn Emanuel Urquhart & Sullivan
Partners David Orta and Daniel Salinas-Serrano and associate Lucas Loviscek in Washington, DC
Wayar & von Borries Abogados
Partners Bernardo Wayar Caballero, Bernardo Wayar Ocampo and Mauricio Olivier Davila Jordan and associate Joaquín Vásquez Schaer in La Paz
Counsel to Bolivia
Partners Eduardo Silva Romero and José Manuel García Represa in Paris and international counsel Alvaro Galindo special legal consultant Juan Felipe Merizalde Urdaneta and in Washington, DC
Procuraduría General del Estado
Attorney General Pablo Menacho Diederich, assistant attorney general Ernesto Rossell Arteaga, director general of defence Yovanka Oliden Tapia and attorneys Milka Costas Sedano and Roberto Alvarez Teran in La Paz
This article was first published by Latin Lawyers sister publication Global Arbitration Review on 30 April.