Energía y Renovación Holding, S.A. v. Republic of Guatemala

At a glance

Parties

Energía y Renovación Holding, S.A. (Panama), claiming for itself and on behalf of its Guatemalan subsidiaries Generadora San Mateo, Generadora San Andrés and Empresa de Transmisión del Norte, v. the Republic of Guatemala

Case no.

ICSID Case No. ARB/21/56

Forum and rules

ICSID Convention arbitration; ICSID Arbitration Rules of 2006; place of proceeding Washington, D.C.; language Spanish

Treaty

Central America–Panama Free Trade Agreement, signed 6 March 2002, in force between Guatemala and Panama since 22 June 2009

Tribunal

Prof. Diego P. Fernández Arroyo (President), Prof. Guido Santiago Tawil, Prof. Raúl E. Vinuesa

Sector

Hydroelectric power; electricity transmission

Outcome

Award of 31 March 2025, by majority: jurisdiction upheld; Guatemala breached the minimum standard of treatment (Article 10.06) by failing to give full protection and security and fair and equitable treatment; the expropriation and discrimination claims failed. Prof. Vinuesa dissented.

Amount

Claimed: USD 131,183,671 in damages plus USD 47,688,223 in interest (USD 178,871,893 in total), and more than USD 1 million in moral damages. Awarded: USD 64,504,000, with compound interest. Guatemala was ordered to pay USD 3,931,028.4 in costs.

The dispute

Energía y Renovación Holding, a Panamanian company, owned through Panamanian intermediate companies three Guatemalan companies developing the Pojom II and San Andrés hydroelectric plants and the Innovación Noroccidente transmission project in San Mateo Ixtatán, Huehuetenango. The project was repeatedly attacked by third parties, never became operational, and its power purchase agreements were assigned to third parties. The claimant argued that Guatemala failed to protect the investment, to honour its commitments under the November 2018 Peace and Development Agreement for San Mateo Ixtatán, and to enforce arrest warrants. It claimed indirect expropriation by omission and breaches of full protection and security, fair and equitable treatment, national treatment and most-favoured-nation treatment. Guatemala objected that the claimant was a shell controlled by Guatemalan nationals (the Castillo and Rodas families) and had made no foreign investment. It also argued abuse of the treaty system, that the investment breached the constitutional ban on foreign ownership of land within 15 km of the border (Article 123), and that the claims were time-barred. On the merits it argued that it had acted with due diligence.

Key holdings

1. Jurisdiction upheld by majority. The Tribunal rejected all of Guatemala's objections to jurisdiction and admissibility, including those based on nationality, the existence of an investment, abuse of rights, the illegality of the investment and the time bar. Award ¶ 493(i)–(ii) (as renumbered by the Decision on Rectification); ¶ 491
2. Article 10.06 sets a single minimum standard that covers both full protection and security and fair and equitable treatment. The majority had already found a breach of full protection and security. It also found fair and equitable treatment breached, even on Guatemala's narrow Waste Management II test. Guatemala's conduct was arbitrary and unreasonable in contrast with the commitments it made in the Peace Agreement, and it deliberately failed to execute arrest warrants against those attacking the project. Award ¶¶ 387–394
3. No expropriation under Article 10.11. The claim was a protection-and-security claim dressed up as expropriation. Most of the events described were acts of third parties with no link to the State. Award ¶¶ 407–408
4. The national treatment and most-favoured-nation claims (Articles 10.02 and 10.03), based on a state of siege declared for a Spanish investor and military protection given to Perenco, became moot once the protection-and-security breach was found. The Tribunal was also not persuaded that the Spain–Guatemala BIT offered materially greater protection. Award ¶¶ 423–424
5. Damages. DCF was rejected as speculative because the dams were far from finished, and sunk costs were used instead. Compensation was capped at the USD 94.3 million supported by invoices. Recoverable assets (USD 4.84 million) and unpaid taxes (USD 8.83 million) were deducted, leaving USD 80.63 million. The majority then cut this by 20% (USD 16,126,000) for failure to mitigate: the claimant had settled insurance claims of over USD 20 million for USD 4 million and had not claimed against the contractor Solel Boneh. Award: USD 64,504,000. Award ¶¶ 452–471
6. Moral damages refused for lack of proof. Pre-award interest runs from the last attack (9 February 2019) at the 5-year US Treasury rate; post-award interest runs at PRIME + 2%. Both are compounded annually. Award ¶¶ 473–474, 480–484
7. Costs. Guatemala bears its own costs, half of the claimant's costs (USD 3,271,873.22) and all of the Tribunal's and ICSID's costs (USD 1,318,310.35), resulting in a reimbursement of USD 3,931,028.4 plus interest at PRIME + 2%. Prof. Vinuesa attached a dissenting opinion; its content is not in the published text. Award ¶¶ 488–492

Procedural history

1. 22 October 2021ICSID receives the Request for Arbitration dated 21 October 2021; it is registered on 15 November 2021.
2. 7 March 2022Tribunal constituted.
3. 2 December 2022Procedural Order No. 2: Guatemala's request for bifurcation rejected.
4. 23 March 2023Procedural Order No. 3: three civil-society organisations admitted as non-disputing parties. By majority, their submission is limited to alleged irregularities in contracts, licences and environmental permits; Prof. Vinuesa partly dissents.
5. 9 August 2023Procedural Order No. 6 on document production and the incident concerning Mr. Versluys, a former employee of a project company now working for the Procuraduría General de la Nación.
6. 15 April 2024Procedural Order No. 11: decision on excluding the legal opinion of Guatemala's expert Mr. Archila Cruz, who would not attend the hearing, postponed until after the hearing.
7. 19 April 2024El Salvador files a non-disputing Party submission under Article 10.29 of the Treaty.
8. 22–27 April 2024Hearing on jurisdiction and merits in Washington, D.C.
9. 7 February 2025Procedural Order No. 12: Guatemala authorised to give Honduras, under Article 10.30, all written submissions and evidence; Prof. Tawil concurs separately on the confidentiality arrangements.
10. 31 March 2025Award, with Prof. Vinuesa's dissenting opinion and declarations. The Decision on Rectification of 27 June 2025 corrects the numbering and cross-references of the operative part at the claimant's request.

Tribunal, counsel and experts

Decided by

• Diego P. Fernández Arroyo President — appointed by the parties jointly
• Guido Santiago Tawil Co-arbitrator — appointed by the claimant
• Raúl E. Vinuesa Co-arbitrator — appointed by the respondent (dissented from the Award; partial dissent on Procedural Order No. 3)

For the claimant

Hogan Lovells · Oscar Arroyo Arzú

For the respondent

Ministerio de Economía · Procuraduría General de la Nación · Greenberg Traurig, LLP · Three Crowns LLP

Experts

Garrett Rush (claimant) · Paul Báez (claimant) · Abigail Alpert (claimant) · Juan Carlos Castillo Chacón (claimant) · Rebecca Vélez (respondent) · Bryan Roach (respondent) · Mario René Archila Cruz (respondent) · Jorge Luis Vargas Valencia (respondent)

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Keywords

• full protection and security
• fair and equitable treatment
• minimum standard of treatment
• indirect expropriation by omission
• Central America–Panama FTA
• hydroelectric
• San Mateo Ixtatán
• Pojom II
• Guatemala
• sunk costs
• DCF rejected
• duty to mitigate
• moral damages
• treaty shopping
• border zone land ownership
• limitation period
• non-disputing party
• Article 10.30 document access

Summary generated with AI from the published documents — refer to the award for the authoritative text.