Holcim Investments (Spain), S.L. v Ecuador

Case summary

At a glance

Parties: Holcim Investments (Spain), S.L. (Spain) v. the Republic of Ecuador
Case no.: PCA Case No. 2021-31
Forum and rules: Ad hoc arbitration under the UNCITRAL Arbitration Rules
Treaty: Spain–Ecuador BIT, signed in Quito on 26 June 1996 (Article XI)
Sector: Cement; social security (special pensions)
Outcome: No decision of the tribunal is among the published documents. The documents show only the start of the case and later steps in the Ecuadorian courts.
Amount: Notice of Arbitration: more than USD 6 million, being USD 3,653,895 and USD 2,436,402.29 already paid, plus any further amounts, legal costs, moral and reputational damages and interest. In June 2023 an Ecuadorian court ordered Holcim Ecuador to pay USD 59,270,191.36; Holcim Ecuador stated it had already paid USD 12.5 million.

The dispute

Holcim Investments (Spain), S.L. said it invested in Ecuador at the end of 2009 by buying 92.24% of Holcim Ecuador (formerly Cemento Nacional, C.A.), the country's largest cement producer. Law 19 of 21 March 1989 on Special Retirement of Cement Industry Workers raised the ex-factory price of cement by two centavos per kilo. Cement companies acted only as withholding agents and passed the money to the Ecuadorian Social Security Institute (IESS). After dollarisation in 2000, Holcim paid the equivalent of USD 0.0000008 per kilo at the legal fixed rate. A pensioners' association then sued. The Constitutional Court (judgment of 15 December 2010, clarification of 24 April 2014 and judgment of 18 April 2018) and the National Assembly (Interpretative Law of 6 March 2017) imposed a new proportional formula with retroactive effect, and enforcement proceedings with changing expert valuations followed. Holcim claimed that these measures were unjustified and discriminatory (Article III(1)), denied fair and equitable treatment (Article IV(1)), amounted to an indirect or judicial expropriation (Article V) and breached national treatment (Article IV(5)). Through the most-favoured-nation clause (Article IV(2)), it also invoked the "effective means" standard of the Ecuador–US BIT. The published documents contain no submission by Ecuador.

Key holdings

No tribunal decision is among the published documents. The points below are the claimant's case as stated in its Notice of Arbitration. They are not findings. Notice of Arbitration
On jurisdiction, the claimant argued as follows. The BIT still protects its investment, because Ecuador's denunciation of 3 May 2017 took effect only after the treaty had renewed to June 2022, and the ten-year sunset clause (Article XII(2)) extends protection to June 2032. The claimant also said it meets the treaty's definitions of investor and investment, and that it gave notice of the dispute on 15 July 2020, more than six months before filing. Notice of Arbitration ¶¶ 27–43
On the merits, the claimant alleged the following. The Constitutional Court's 2010 judgment rewrote Article 4 of the 1989 law with retroactive effect and against Holcim alone, ordering it to pay USD 89,319,809.41. The 2014 clarification admitted calculation errors, and the court-ordered enforcement in 2016 fixed the amount at USD 3,653,895. Notice of Arbitration ¶¶ 63–69
The claimant alleged that the 2017 Interpretative Law was in fact a retroactive amendment, which added USD 2,436,402.29 for 2011–2017. It further alleged that the 2018 Constitutional Court judgment reopened the amount owed, and that court experts then produced valuations between USD 8,853,183.65 and USD 109,899,616.13. Notice of Arbitration ¶¶ 70–88
The claimant asked, first, for a declaration of breach and an order that Ecuador stop the breaches. In the alternative, it asked for full compensation: repayment of USD 3,653,895 (paid on 3 February 2017) and USD 2,436,402.29 (paid on 28 August 2017), any further amounts, its legal costs in Ecuador and in the arbitration, moral and reputational damages, and interest. Notice of Arbitration, Petitum