Quiborax S.A., Non Metallic Minerals S.A. and Allan Fosk Kaplún v. Plurinational State of Bolivia

Case summary

At a glance

Parties: Quiborax S.A. (Chile), Non Metallic Minerals S.A. (Bolivia) and Allan Fosk Kaplún (Chile) v. Plurinational State of Bolivia
Case no.: ICSID Case No. ARB/06/2
Forum and rules: ICSID Convention arbitration; annulment proceeding under the ICSID Arbitration Rules 2006
Treaty: Bolivia–Chile BIT, signed 22 September 1994, in force 21 July 1999
Tribunal: Prof. Gabrielle Kaufmann-Kohler (President), Hon. Marc Lalonde, Prof. Brigitte Stern (partially dissenting)
Committee: Dr. Andrés Rigo Sureda (President), Dr. Milton Estuardo Argueta Pinto, Christer Söderlund
Sector: Mining (ulexite and borates)
Outcome: Jurisdiction over Allan Fosk declined. Bolivia was found to have unlawfully expropriated the investment of Quiborax and NMM and breached the fair and equitable treatment and non-impairment standards (Award, 16 September 2015). The ad hoc Committee rejected Bolivia's application for annulment in full (18 May 2018).
Amount: Claimed in the Memorial: not less than USD 61,481,461, plus USD 5 million in moral damages (later USD 4 million). Awarded: USD 48,619,578, with interest at 1-year LIBOR + 2% compounded annually from 1 July 2013. Bolivia was ordered to pay USD 675,000 plus 50% of the claimants' share of the arbitration costs; each side bore its own legal fees. In the annulment, Bolivia bore the Committee's fees and ICSID's charges (total costs USD 406,741.16).

The dispute

Quiborax, a Chilean borate producer, invested in Bolivia through NMM, a Bolivian company that held eleven ulexite mining concessions in the Río Grande delta of the Salar de Uyuni. Quiborax owned 50.995% of NMM. Law 2,564 of 9 December 2003 repealed the Ley Valda and authorised the Executive to annul concessions. Supreme Decree 27,589 of 23 June 2004 then revoked NMM's concessions, and the Mining Superintendency annulled them on 28 October 2004. The claimants alleged unlawful expropriation (Article VI), a breach of fair and equitable treatment (Article IV) and impairment through unreasonable and discriminatory measures (Article III) under the Bolivia–Chile BIT. They also claimed for harassment, including a criminal case Bolivia opened in 2008 alleging that NMM's shareholder minutes had been forged to gain access to ICSID. Bolivia argued that the claimants were not shareholders, had made no investment, had invested illegally and had abused nationality and process. It also argued that the concessions were void from the start and that the revocation was a legitimate exercise of its police powers.

Key holdings

Provisional measures granted. Bolivia had to take all appropriate measures to suspend criminal case No. 9394/08 and other criminal proceedings directly related to the arbitration, and to refrain from starting new ones. The criminal case was closely linked to the arbitration and threatened the claimants' access to witnesses. It did not breach the exclusivity rule of Article 26 of the ICSID Convention. Decision on Provisional Measures, ¶¶ 130, 148, 163–165 and Section V
The Tribunal has jurisdiction over Quiborax and NMM but not over Allan Fosk. Fosk received his single share only to meet the three-shareholder minimum of Bolivian law and made no contribution, so he held no investment under Article 25(1). The claimants did not fabricate evidence. Bolivia did not prove a breach of the BIT's legality requirement, which covers only non-trivial violations, breaches of the foreign investment regime, or fraud at the time the investment is made. Decision on Jurisdiction, ¶¶ 233, 237, 266, 282, 309
Bolivia breached Article VI by expropriating the claimants' investments without meeting the Article's requirements. It also breached Article IV(1) (fair and equitable treatment) and Article III(2) (impairment through unreasonable or discriminatory measures). It must pay USD 48,619,578 in damages, with interest at 1-year LIBOR + 2% compounded annually from 1 July 2013. Award, ¶ 626(a)–(e)
Provisional measures under Article 47 of the ICSID Convention are binding. By not suspending the criminal case, Bolivia breached Article 47. This was not a breach of its duty to arbitrate in good faith, and the right to procedural integrity was not in fact impaired. The requested declaratory judgment was refused. The post-expropriation criminal case and audits did not breach Articles III or IV. Award, ¶¶ 572, 582–583, 594–596
The claim for moral damages was dismissed. The underlying harassment claims failed, and the evidence did not meet the high threshold for this exceptional remedy. Award, ¶¶ 617–619
Costs: Bolivia must reimburse the USD 675,000 in advances the claimants paid on its behalf, plus 50% of the claimants' share of the arbitration costs. By majority, each party bears its own legal fees; Lalonde would have had Bolivia bear 50% of the claimants' legal costs. Brigitte Stern signed subject to a partially dissenting opinion. Award, ¶ 625 and n. 802
The stay of enforcement was continued without security. The Committee held that it may make a stay conditional, but it accepted the categorical statement of Bolivia's Attorney General that Bolivia would comply with the Award as sufficient. Decision on Stay of Enforcement, ¶¶ 46, 66–69
Annulment rejected in full and the stay lifted. The Tribunal did not manifestly exceed its powers through the provisional measures decision, and the documents showed that Bolivia had not in fact suspended the criminal case. It did not exceed its powers in finding a protected investment. Its quantum analysis, which combined ex ante and ex post data, was reasoned, applied full reparation within its discretion, and did not breach a fundamental rule of procedure. The Committee also held that it has no power to review the decision on the proposal to disqualify the Tribunal. Decision on Annulment, ¶¶ 136, 143, 153, 168, 190, 193, 198