Security Services, LLC d/b/a Neustar Security Services (formerly Neustar, Inc.) v. Republic of Colombia

Case summary

At a glance

Parties: Neustar, Inc. (United States) and Vercara, LLC (formerly Security Services, LLC d/b/a Neustar Security Services) v. Republic of Colombia
Case no.: ICSID Case No. ARB/20/7
Forum and rules: ICSID Convention; ICSID Arbitration Rules 2006; place of proceeding Washington, D.C.; hearing held in London
Treaty: Colombia–United States Trade Promotion Agreement (in force 15 May 2012), Chapter 10
Tribunal: Prof. Dr. Julian D.M. Lew (President), Prof. Dr. Kaj Hobér, Prof. Yves Derains
Sector: Internet domain registry (.co ccTLD); telecommunications
Outcome: Award of 20 September 2024: the Tribunal has jurisdiction over Neustar but not over Vercara; all claims dismissed on the merits; each side bears its own costs.
Amount: Claimed: in excess of USD 350 million (estimate in the Request for Arbitration). Awarded: nothing. Each party bears its own costs (claimant: USD 2,545,293.64; respondent: USD 2,283,351.79). The parties share equally the arbitration costs of USD 829,175.95.

The dispute

Neustar, Inc., a Delaware company, owned 100% of .Co Internet S.A.S. from 2014. Under Concession 0019 of 2009, .Co Internet ran Colombia's .co domain for ten years. The concession said its term "may" be renewed. In 2019 the Ministry of Information Technology and Communications (MinTIC) refused to negotiate an extension and launched a public tender instead. .Co Internet won that tender in April 2020 and received a new 2020 Contract with a much lower revenue share. Neustar claimed that Colombia breached fair and equitable treatment (Article 10.5), national treatment and most-favoured-nation treatment (Articles 10.3 and 10.4) and the protection of confidential business information (Article 10.14). It also invoked the "unreasonable measures" clause in Article 4(1) of the Swiss–Colombia BIT through the MFN clause. Colombia raised seven jurisdictional objections: fork-in-the-road, an uncrystallised dispute, a defective waiver, lack of standing, abuse of process, purely contractual claims, and the transfer of the claim to Vercara. On the merits, it argued that renewal was a discretionary contractual prerogative that it was entitled to decline.

Key holdings

No fork-in-the-road bar under Annex 10-G. Neustar's application to the Consejo de Estado sought only interim relief to preserve the status quo, which Article 10.18(3) allows. The Consejo de Estado's own comments on the merits did not amount to a definitive choice of forum. Award ¶¶ 220–232
The dispute had crystallised when the Notice of Intent and the Request for Arbitration were filed, and the Notice of Intent was not defective. The waiver was valid even though it referred only to Colombian courts and to the right to "initiate" proceedings. Read as a whole and together with paragraph 118 of the Request, it covered all fora. The pending interim-measures proceedings did not breach it. The claims are treaty claims, not purely contractual ones, because MinTIC acted in a public capacity. Award ¶¶ 258, 286, 422–423
Neustar validly transferred the MinTIC Claim to Security Services (now Vercara) under Delaware law; champerty did not apply because the two companies were closely affiliated. Under international law, however, a claimant cannot be substituted midway through the proceedings without the respondent State's consent, and Colombia gave none. Neustar cannot withdraw its consent unilaterally (Article 25 ICSID Convention). Neustar therefore remains the claimant, and the Tribunal has no jurisdiction over Vercara. Award ¶¶ 498, 508, 518–526
No breach of fair and equitable treatment. Article 10.5 protects covered investments and sets the customary minimum standard, which places a high burden on the claimant. Neustar had no contractual or legal right to renewal or to negotiations, because Clause 4 and Article 2 of Law 1065 of 2006 provide only a possibility. The decision to tender pursued a legitimate policy aim of obtaining better financial terms. Neustar proved no arbitrariness, bad faith, tailoring of the tender for Afilias, lack of due process or legitimate expectations. Award ¶¶ 598, 608, 619, 632, 645–648
National treatment and MFN claims dismissed. The decision not to renew and to tender fell within MinTIC's freedom of contract and was not "treatment" under Articles 10.3 and 10.4. In any event, Neustar showed no nationality-based discrimination and no comparators in like circumstances. The Article 10.14 claim failed for lack of evidence. Award ¶¶ 700–710
The MFN clause cannot be used to import Article 4(1) of the Swiss–Colombia BIT and so widen the minimum standard agreed in Article 10.5. Even if it could, the decision not to renew was neither unreasonable nor irrational. Award ¶¶ 725–729
Costs. Neither side succeeded: six of Colombia's seven jurisdictional objections failed, and all of Neustar's claims failed. Each party bears its own costs, and the arbitration costs are shared equally. Earlier, the Decision of 27 September 2023 had rejected Colombia's request for USD 3.5 million in security for costs, finding no exceptional circumstances and an application that was neither timely nor urgent. Award ¶ 737; Decision on Security for Costs