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Uruguayan State requested hefty sum in damages over Montevideo Port deals

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MercoPress | 25 May 2024

Uruguayan State requested hefty sum in damages over Montevideo Port deals

Chilean and Canadian partners of the Montecon consortium handling operations in the port of Montevideo have started an arbitration process for “damages and losses” worth up to US$ 600 million against the Uruguayan State before the International Centre for Settlement of Investment Disputes (ICSID) after preventing the company from transferring and storing containers in the facility’s docks. Montecon is owned by the Neltume Ports consortium.

The Washington-based ISCSID belonging to the World Bank Group agreed to handle the case filed by the plaintiff’s parent company Neltume Ports S.A. providing loading and unloading services at Montevideo’s Port public docks. The claim argues that the Uruguayan State violated the Investment Promotion Agreement signed with Chile through a series of measures adopted by the government which ”prevent Montecon from transferring and storing containers in the public docks (...) while ignoring the legal regime of free competition applicable to these activities.“

The State’s actions were also said to violate the ”Minimum Standard of Treatment, National Treatment, and Most Favored Nation Clause, contemplated in the international treaty,“ it was explained. The process was launched after unsuccessfully closing a period of consultations and direct negotiations to reach an amicable solution.

The Canadian shareholders filed a second case worth US$ 240 million before the ICSID for violating the 1997 investment protection treaty between Uruguay and Canada. The Canadian ATCO owns 40% of Neltume Ports and Chile’s Ultramar holds the other 60%. The ICSID has yet to announce whether this second case has been accepted.

Once the arbitration has been accepted by ICSID, the next step is ”the composition of the Arbitral Tribunal, the definition of the procedure and the commencement of the trial itself,” Montecon also pointed out in a communiqué.

Uruguay allegedly broke the international agreements by signing a separate understanding with Katoen Natie of Belgian roots in March 2021 for US$ 455 million to expand the Specialized Container Terminal of the Port of Montevideo, including the construction of a second container yard of about 22 hectares and a second 700-meter pier, with a depth of 14 meters. Katoen Natie owns 80% of the Terminal Cuenca del Plata (TCP), while the other 20% belongs to the Uruguayan State’s National Ports Administration (ANP).

In addition, the original concession granted in 2001 for 30 years has been extended for another 50 years until 2081 in exchange for dropping a complaint “for infringements” to the Treaty of Reciprocal Promotion and Protection of Investments between Belgium-Luxembourg and Uruguay. Katoen Natie had threatened to seek international arbitration for US$ 1.5 billion for the alleged unfair competition from Montecon in the public docks.

 source: MercoPress