Read on Twitter
So I’ve been seeing a lot of commentary about this in IEL Twitter, along the lines of “of course an investor is suing Peru before ICSID over Covid-19 measures!” Since this is one of those rare occasions where my local news is also int’l news, let me explain what is going on /1 https://twitter.com/elkady_hamed/status/1248495293819006976">https://twitter.com/elkady_ha...
The story is a bit more complicated. For some context, Peru just had congressional elections. The dominant parties are mostly populist, competing with a highly popular President that recently committed 12% of gdp for covid aid
On Mar 30, the Gov suspended toll payments in the 24 publicly managed national highways (by a public entity called Provias). On Apr 2, after engagement with private operators, the remaining 32 privately managed national highways suspended toll payments too https://www.gob.pe/institucion/mtc/noticias/111817-mtc-un-total-de-56-peajes-a-nivel-nacional-entre-publicos-y-privados-dejaron-de-cobrar-por-pase-de-via-durante-el-estado-de-emergencia">https://www.gob.pe/instituci...
Note also that by law, emergency providers, police and firemen are exempted from toll payment regardless. The suspension is meant to benefit either trucks moving food supplies or essential workers going to work. The rest of the country is in strict lockdown
There are a few tolled expressways that are *not* part of the National system though, particularly in Lima, the capital. On March 20, the private operators suspended tolls for private vehicles transporting police, doctors or firemen http://limaexpresa.pe/noticia/56/lima-expresa-exceptua-del-cobro-del-peaje-a-vehiculos-particulares-que-transportan-a-personas-que-prestan-servicios-de-emergencia">https://limaexpresa.pe/noticia/5...
Toll payment remained in place for essential workers. Since these roads have contracts with the Lima city hall, not Provias, it is up to the local gov to secure a suspension. These are visible well known projects and so “companies still charging tolls” became national news
Not wanting to be seen as not taking action in front page news issues, Congress passed a law suspending all toll payments without compensation in all roads, local or national. This is where the ICSID issue arises
Under Peru law, the President has 15 days to assent to or observe the law and send it back to Congress. The Exec is against this law because the suspension applies outside the context of the concession contract and so could trigger an investment dispute
Fun fact: the contract has an ICSID clause but under the terms of Peru’s acceptance of ICSID jurisdiction, the Lima city hall cannot commit the Republic’s consent, so its an invalid clause. The Exec would be more worried of a treaty claim
To date, no investor has actually threatened with ICSID action. The road operator has rather said lack of toll flows puts in danger its abbility to pay its workers and keep the roads in good shape for emergency vehicles. http://limaexpresa.pe/noticia/57/estamos-garantizando-la-transitabilidad-y-la-movilidad-segura-durante-el-estado-de-emergencia-nacional">https://limaexpresa.pe/noticia/5...
In theory tho, the company could access loans from the Exec’s covid benefits package I mentioned above, so its a matter of the Lima City Hall, the Transport Ministry, the trucker gild and the investors sitting together and coming to terms, which is why the law is not yet in force
So for clarity’s sake, no. This is not the first Covid-19 ICSID case (not yet at least and it does not seem like it will be). Its more about a squabble between Peru’s Legislative and Executive over who proposes “the best covid measures”
Of course this should serve as a lesson for the govt, local and national, to negotiate clauses that give it a lot more flexibility with toll charges in cases like this in the future - maybe an addendum should be in the works!
