Jindal Steel Bolivia S.A. v. Plurinational State of Bolivia, Corporación Minera de Bolivia and Empresa Siderúrgica del Mutún

Case summary

At a glance

Parties: Jindal Steel Bolivia S.A. (subsidiary of Jindal Steel & Power Limited, India) v. Plurinational State of Bolivia, Corporación Minera de Bolivia (COMIBOL) and Empresa Siderúrgica del Mutún (ESM)
Case no.: ICC Case No. 20086/ASM/JPA
Forum and rules: ICC arbitration under the 2012 ICC Rules and Bolivian Law 1770 on Arbitration and Conciliation; seat Santa Cruz de la Sierra, Bolivia
Treaty: None. Arbitration clause 42.3 of the Mutún joint venture (riesgo compartido) contract of 18 July 2007
Tribunal: Rodrigo Oreamuno B. (President), Eduardo Zuleta Jaramillo, Diego P. Fernández Arroyo
Sector: Mining and steel (Mutún iron ore)
Outcome: Award on Jurisdiction and Admissibility (5 November 2018): no jurisdiction over Bolivia (by majority) or COMIBOL; jurisdiction over ESM limited to contractual and certain good-faith claims; res judicata objection deferred. Eduardo Zuleta dissented in part.
Amount: Claimed: damages of not less than USD 68,160,245, plus reimbursement of USD 18 million for bank guarantees. JSB ordered to pay costs of USD 360,202.82 to Bolivia and USD 263,546.50 to COMIBOL; interest on those costs refused; other costs reserved.

The dispute

Jindal Steel & Power Limited won Bolivia's international tender for the Mutún iron ore and steel project. Its Bolivian subsidiary, Jindal Steel Bolivia S.A. (JSB), signed a joint venture contract on 18 July 2007 with ESM, the State steel company. COMIBOL signed as owner and assignor of the mining concessions, and three Ministers signed as "fedatarios" (attesting officials). JSB terminated the contract on 16 July 2012. It claimed that the respondents had failed to deliver the contract area and to supply gas, had changed the legal framework, had wrongly called its bank guarantees, and had brought criminal proceedings against its representatives. It relied on the contract, the duty of good faith, tort (Article 984 of the Civil Code) and the Bolivian Investment Law. Bolivia and COMIBOL denied that they were parties to the contract or to its arbitration clause. ESM objected that several claims fell outside the clause or could not be arbitrated, and that the damages claim was barred as res judicata by the award of 6 August 2014 in an earlier ICC arbitration between JSB and ESM (No. 18398).

Key holdings

The contract separates "Partes Intervinientes" (intervening parties) from "Partes" (parties). Only ESM and JSB are "Partes" and constituent partners of the joint venture. COMIBOL signed only as owner and assignor of the concessions, and the Ministers signed only as attesting officials. ¶¶ 292–294, 316
Bolivia did not become a party through legislative approval of the contract, its role in the tender, the gas-supply guarantee in clause 47 (given under Hydrocarbons Law 3058), or its later conduct. Under the principle of legality, the State and COMIBOL could become parties only through an express administrative act. The legal provisions stating that ESM would sign "on behalf of the Bolivian State" do not create agency under Article 467 of the Civil Code. ¶¶ 341, 363–367, 372
Neither Bolivia nor COMIBOL consented to the arbitration clause. Under Law 1770 and Bolivian administrative law, a State entity cannot be bound to an arbitration agreement by implied consent. No treaty or other instrument contains an offer by Bolivia to arbitrate. The objections of Bolivia (by majority) and of COMIBOL were upheld. ¶¶ 392–396, 431(a)–(b)
ESM's subject-matter objection was upheld in part. The Tribunal keeps jurisdiction over the contract claims against ESM and over the good-faith claims about the calling of the guarantees, the contract area and the gas supply. It has no jurisdiction over the claim on changes to the Bolivian legal framework (state functions, which Article 6.4 of Law 1770 excludes from arbitration), the tort claims or the Investment Law claims. ¶¶ 408–414, 431(c)
ESM's res judicata objection based on the award in Arbitration 18398 was deferred to a later award. The Request for Arbitration did not break down the damages, so the Tribunal could not yet decide whether the object and cause of the two claims were the same. ¶¶ 420–424, 431(d)
Costs: JSB pays the costs of Bolivia and COMIBOL in full (USD 360,202.82 and USD 263,546.50). Their requests for interest were refused for lack of reasons. The costs of JSB and ESM were reserved. ¶¶ 428–430, 431(g)–(h), (k)
Eduardo Zuleta agreed that there was no jurisdiction over COMIBOL. He disagreed with the majority's reasoning on Bolivia's participation, on legality and on ESM acting "in representation" of the State. He also found that the legal-framework claim against ESM under clause 6.35 was a contractual question that should have been left for the merits. Opinion of Eduardo Zuleta, pp. 1–3

Procedural history

18 July 2007The Mutún joint venture contract is signed. It is approved by Supreme Decree 29212 (31 July 2007) and Law 3789 (24 November 2007).
19 December 2011JSB starts ICC Arbitration 18398 against ESM alone.
6 August 2014Award in Arbitration 18398. It was partially annulled by the First Civil and Commercial Court of Santa Cruz on 18 February 2015.
27 February 2014JSB files its Request for Arbitration against Bolivia, COMIBOL and ESM. The ICC Secretariat receives it on 3 March 2014.
20 August 2014Tribunal constituted when the President, appointed by the co-arbitrators, is confirmed.
23 December 2014Procedural Order No. 1 fixes the seat in Santa Cruz de la Sierra.
February 2015 – November 2016The proceedings are suspended several times while the parties negotiate. They resume after JSB reports that no settlement was reached.
2–4 April 2018Hearing on jurisdiction in Bogotá.
5 November 2018Award on Jurisdiction and Admissibility, with the partial dissent of Eduardo Zuleta.
November 2018Opinion of Eduardo Zuleta, signed in Santa Cruz de la Sierra.