Summary

In the Arbitration under the Convention on the Settlement of Investment Disputes Between States and Nationals of Other States and the United States-Peru Trade Promotion Agreement

CLAIMANT'S NOTICE OF ARBITRATION

November 24, 2020

TABLE OF CONTENTS

I. INTRODUCTION
II. PARTIES
III. FACTUAL BACKGROUND
A. Maple Successfully Operated the Refinery and Adjacent Oil Fields for Two Decades
B. Maple Suffered the Fallout from Former President PPK's High- Profile Dispute with Maple's Former Investor
C. Block 126 Presents a Unique Opportunity for Claimant
D. Peru's Eleventh-Hour Reversal Torpedoed the Frontera Deal
E. Despite Claimant's Efforts to Resolve the Dispute Amicably, Peru Terminated Maple's Lease and Licenses and Forced Maple into Liquidation
IV. PERU'S BREACHES CAUSED SIGNIFICANT LOSS
V. THE TRIBUNAL AND THE CENTRE HAVE JURISDICTION, AND CLAIMANT HAS COMPLIED WITH THE REQUIREMENTS FOR SUBMISSION OF A CLAIM TO ARBITRATION
A. Claimant Satisfies the Treaty's Jurisdictional Requirements
B. Both Parties Have Consented to Submit the Dispute to ICSID Arbitration
C. Claimant Has Fulfilled All Other Treaty Requirements to Commence Arbitration
VI. CONSTITUTION OF THE TRIBUNAL
VII. REQUESTED RELIEF

Pursuant to Articles 10.16.1(a) and 10.16.3(a) of the United States-Peru Trade Promotion Agreement (the "Treaty") and Article 36 of the Convention on the Settlement of Investment Disputes Between States and Nationals of Other States (the "ICSID Convention"), Worth Capital Holdings 27 LLC ("Worth Capital" or "Claimant"), hereby submits this Notice of Arbitration against the Republic of Peru ("Peru" or the "Government") for claims arising out of its investment in Maple Gas Corporation del Perú S.R.L. ("Maple").

I. INTRODUCTION

1. This dispute arises out of Peru's arbitrary and confiscatory measures against Claimant's investment in Maple, a company engaged in the extraction and refining of hydrocarbons in the remote Amazonian jungle region of Peru.

2. Maple's operations in Peru were governed by a set of agreements between Maple and two oil companies wholly owned and controlled by the Government of Peru. Until Peru drove Maple out of business and forced it into liquidation, Maple operated the Pucallpa Refinery--a natural gasoline and crude oil processing facility and sales terminal that was originally built in the 1960s but that Maple upgraded in the 1990s--and held licenses to exploit liquid hydrocarbons in several adjacent oil fields.

3. Peru also granted its approval for Maple to take over the lucrative exploration and production license for the nearby Block 126 from a Canadian listed energy company Frontera Energy Corporation ("Frontera"). Block 126 was a unique and valuable opportunity for Maple. Even at a relatively early stage of development, Block 126 had total certified resources of over 200 million barrels of oil equivalent ("MMBoe"), and its production would have allowed the Refinery to operate at full capacity for years to come, including through an extension of the lease term. On the basis of the opportunity presented by Block 126, the Refinery, and Maple's other licenses, Claimant invested over US$62 million to acquire Maple in November 2016.

4. After Claimant's investment however, Peru took adverse actions against Maple that sent Maple into a tailspin, thwarting Maple's plan to take over Block and culminating in the closure of the Refinery, the abandonment of Block 126, and the liquidation of Maple. Peru went to economically irrational lengths to deprive the Refinery of feedstock, arbitrarily withdrew the approval it had given for Maple to take over the Block 126 license, publicly disparaged Maple, forcibly took over the Refinery and Maple's oil fields, and ultimately terminated the lease and Maple's licenses. Rather than partner with Maple, Peru issued an unsuccessful request for bids and, after failing to attract other investors, declared Block 126 deserted, depriving the State of valuable revenues.

5. Peru's conduct constitutes, at a minimum, a failure to accord Claimant's investments the minimum standard of treatment in accordance with customary international law in breach of Article 10.5 of the Treaty and an unlawful expropriation of Claimant's investment in breach of Article 10.7 of the Treaty.

Peru has caused Claimant significant damages.

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C. Claimant Has Fulfilled All Other Treaty Requirements to Commence Arbitration.

68. Claimant has also satisfied the Treaty's additional, specific requirements for the submission of claims to arbitration.

69. First, consistent with Articles 10.15 and 10.16.2 of the Treaty, Worth Capital sought "to resolve the dispute through consultation and negotiation,"79 sent Peru a Notice of Intent more than two years ago, and met with the Commission appointed by Peru to resolve the dispute, to no avail

70. Second, consistent with Articles 10.16.2 and 10.16.3 of the Treaty, "at least days"81 have passed since Claimant submitted its Notice of Intent, and more than "six months have elapsed since the events giving rise to the claims" of Treaty breach

71. Third, consistent with Article 10.18.1 of the Treaty, not "more than three years have elapsed from the date on which the claimant first acquired, or should have acquired, knowledge of the breach alleged. . . and knowledge that the claimant. . . has incurred loss or damage"83 until Claimant's communication of the present Notice of Arbitration to the Centre's Secretary-General. Claimant could not have acquired knowledge of breach and loss with respect to Peru's violation of the minimum standard of treatment until, at the earliest, PERUPETRO's January 4, 2018 confirmation that it would not reconsider its November 27, 2017 letter withdrawing the green light it had given Maple to take over the Block 126 license. Claimant could not have acquired knowledge that it had been expropriated until some time thereafter. The Refinery did not suspend operations until December 2017, and even then Maple continued looking for alternative business leads; Maple did not enter liquidation proceedings until February 2019; Peru took over control of Maple's Refinery and oil fields by August 2019; and Peru terminated the Lease Agreement as of August 2018 and the Licenses in February and March 2019.

72. Fourth, consistent with Article 10.18.2(b)(i) of the Treaty, Claimant has waived "any right to initiate or continue before any administrative tribunal or court under the law of any Party, or other dispute settlement procedures, any proceeding with respect to any measure alleged to constitute a breach referred to in Article 10.16" of the Treaty

73. Finally, consistent with Article 10.18.4(a) and Annex 10-G of the Treaty, neither Claimant nor Maple have initiated any other actions alleging breach of the Treaty, and they have not submitted any Treaty claims to Peru's administrative tribunals, courts, or any other applicable dispute settlement procedure

VI. CONSTITUTION OF THE TRIBUNAL

74. Article 10.19 of the Treaty provides that "the tribunal shall comprise three arbitrators, one arbitrator appointed by each of the disputing parties and the third, who shall be the presiding arbitrator, appointed by agreement of the disputing parties."86 Article 10.16.6(a) of the Treaty further provides that "the claimant shall provide with the notice of arbitration (a) the name of the arbitrator that the claimant appoints."87

75. Claimant hereby appoints Dr. Horacio Grigera Naón as its party-appointed arbitrator. Dr. Grigera Naón's contact details are as follows:

Professor Dr. Horacio Grigera Naón
[...]

VII. REQUESTED RELIEF

76. Claimant requests that the Tribunal issue an award:

a. Declaring that Peru has breached Articles 10.5 and 10.7 of the Treaty;

b. Ordering Peru to pay full compensation for all damages and losses suffered by Claimant as a result of Peru's breaches of the Treaty, in an amount to be determined in the course of this proceeding;

c. Ordering Peru to pay all the costs of the arbitration, as well as Claimant's fees and expenses;

d. Ordering Peru to pay pre-award and post-award interest at a commercial rate to be determined in the course of this proceeding; and

e. Ordering any other such relief as the Tribunal may deem just and appropriate in the circumstances.

77. Claimant reserves its rights to amend or supplement this Notice of Arbitration, including the requested relief and the amount claimed, and to seek relief for additional breaches arising from Peru's past, current, or future conduct.

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Footnotes omitted