Italba Corporation v. Oriental Republic of Uruguay

Case summary

At a glance

Parties: Italba Corporation (Florida, United States) v. the Oriental Republic of Uruguay
Case no.: ICSID Case No. ARB/16/9
Forum and rules: ICSID Convention arbitration; ICSID Arbitration Rules 2006; place of proceeding Washington, D.C.
Treaty: United States–Uruguay BIT, signed 4 November 2005, in force 1 November 2006
Tribunal: Rodrigo Oreamuno (President), John Beechey, Zachary Douglas
Sector: Telecommunications; wireless data services; radio spectrum
Outcome: Claims dismissed for lack of jurisdiction (22 March 2019): Italba neither owned nor controlled its alleged Uruguayan subsidiary Trigosul S.A. Italba's later annulment application was discontinued, and a US federal court entered the award as a judgment.
Amount: Italba was ordered to pay Uruguay USD 5,885,344.17 in costs: USD 332,507.42 for Uruguay's share of the arbitration costs and USD 5,552,836.75 for its legal and expert fees. Interest on costs was refused. Italba had claimed costs of USD 8,923,882.28; Uruguay's costs were USD 6,002,836.75.

The dispute

Italba Corporation, a Florida company founded by Dr. Gustavo Alberelli (an Italian national) and Ms. Beatriz Alberelli, claimed to own the Uruguayan company Trigosul S.A. Trigosul held an authorisation and spectrum allocations (sub-blocks 3425–3450 MHz and 3525–3550 MHz) to provide wireless data services. URSEC released Trigosul's frequencies on 20 January 2011 (Resolution 001), and the Ministry of Industry, Energy and Mining revoked its authorisation on 8 July 2011 (Resolution 335/011). In 2013 the frequencies went to a competitor, Dedicado S.A. On 23 October 2014 the Tribunal de lo Contencioso Administrativo annulled both acts (Judgment 579/2014). Italba alleged that Uruguay failed to comply with that judgment and claimed expropriation (Article 6), breach of fair and equitable treatment and denial of justice (Article 5), discriminatory treatment (Articles 3 and 4), and breach of full protection and security. Uruguay objected that Italba neither owned nor controlled Trigosul, that Italba was controlled by a non-US national and had no substantial business in the United States, that the claims were time-barred, and that the licences created no rights protected under domestic law. On the merits, Uruguay argued that spectrum allocations are provisional and revocable and that it had complied with the judgment.

Key holdings

Provisional measures refused. Uruguay has the sovereign right to investigate suspected forgery of documents filed in the arbitration. There was no evidence of bad faith, and no substantive and compelling evidence of a serious risk of irreparable harm. The Tribunal accepted Uruguay's guarantee that Dr. Alberelli and Mr. Herbón could take part in the case. Decision on Provisional Measures, ¶¶ 115–121, 126
Italba does not own Trigosul. Under Article 305 of the Uruguayan Commercial Companies Act, a share transfer takes effect only once it is notified to the company and entered in the share register. Only certificate No. 4 was endorsed to Italba, and that endorsement was never registered. Under Florida law, donative intent, delivery and acceptance were not proven either. The 'economic reality' theory based on Article 189 does not apply, and Italba made no proven capital contribution. Award ¶¶ 212–253
Italba does not control Trigosul. The documents did not show that Italba made Trigosul's business decisions, contributed its capital or funded its operations. The evidence instead showed that Dr. Alberelli, an Italian national who cannot qualify as an investor under the Treaty, controlled Trigosul personally. Award ¶¶ 254–263, 272, 284
No jurisdiction. Italba is not an investor for the purposes of Articles 1 and 24 of the Treaty and Article 25 of the ICSID Convention. The Tribunal did not rule on Uruguay's other objections. Award ¶¶ 285–286, 300(a)–(b)
The Tribunal refused to exclude the report of Uruguay's expert Professor Eugenio Xavier de Mello Ferrand. His firm is an economic interest group (GIE) whose members do not share profits, which the Tribunal likened to barristers' chambers. Other members' work for Uruguay in another case therefore neither disqualified him nor had to be disclosed. Award ¶¶ 151–161
Costs follow the event. Italba bears all arbitration costs and reimburses Uruguay's legal and expert fees: USD 5,885,344.17 in total. Uruguay's request for interest on costs was denied. Award ¶¶ 297–300
The unchallenged ad hoc Committee members rejected Italba's proposal to disqualify Gabriel Bottini. The alleged lack of candour concerned disclosures more than six years old in Saint-Gobain v. Venezuela, on which the claimant there, advised by the same counsel, had never acted. No manifest lack of the qualities required by Article 14(1) was shown. Decision on Disqualification ¶¶ 43–45
The US District Court for the Southern District of Florida recognised the award and entered it as a judgment for USD 5,885,344.17, plus post-judgment interest under 28 U.S.C. § 1961 and costs. It denied prejudgment interest because the Tribunal had already refused interest on costs. Order of 7 June 2022, pp. 16–18

Procedural history

5 August 2015Italba notifies Uruguay that a dispute has arisen.
16 February 2016Request for Arbitration filed. ICSID registers it on 24 March 2016.
27 May 2016Tribunal constituted. Procedural Order No. 1 follows on 29 July 2016.
15 February 2017Decision rejecting Italba's application for provisional measures to stop Uruguay's criminal investigation of its witnesses for alleged forgery.
13–20 November 2017Hearing on jurisdiction, merits and quantum in Washington, D.C., open to the public. The United States attends as non-disputing Party; it had filed a written submission on 11 September 2017.
22 March 2019Award: jurisdiction declined and costs of USD 5,885,344.17 ordered against Italba.
2 July 2019Italba applies for annulment. The application is registered on 10 July 2019 with a provisional stay of enforcement. The ad hoc Committee is constituted on 27 August 2019.
29 October 2019Proposal to disqualify Committee member Gabriel Bottini rejected.
16 June 2020Annulment proceeding discontinued because Italba did not pay the cost advance; the stay is terminated.
7 June 2022The US District Court for the Southern District of Florida grants Uruguay's motion in part and enters the award as a judgment; prejudgment interest is denied.

Tribunal, counsel and experts

Decided by: Rodrigo Oreamuno President — appointed by the parties jointly
John Beechey Co-arbitrator — appointed by the claimant
Zachary Douglas Co-arbitrator — appointed by the respondent
Andrés Rigo Sureda Committee president — appointed by the institution
Mónica Pinto Committee member — appointed by the institution
Gabriel Bottini Committee member — appointed by the institution (challenge rejected)
Melissa Damian Judge, US District Court, Southern District of Florida
For the claimant: Hughes Hubbard & Reed LLP · Alston & Bird LLP
For the respondent: Foley Hoag LLP · Government of Uruguay
Experts: Santiago Dellepiane Avellaneda (claimant) · Luis Lapique (claimant) · John Hargett (claimant) · Luis Valle (claimant) · Santiago Pereira Campos (respondent) · Daniel Flores (respondent) · Ettore Comi (respondent) · Louis T.M. Conti (respondent) · Néstor Alejandro Paz Portela (respondent) · Eugenio Xavier de Mello Ferrand (respondent)