Summary

Source: icsid.worldbank.org

TABLE OF CONTENTS

I. INTRODUCTION AND PARTIES
A. Procedural History
II. FACTUAL BACKGROUND
1. History of the Cerro Verde Mine
2. Single Unified Text of the General Mining Law and Regulations to Title Nine of the General Mining Law
3. Acquisition of SMCV
4. The 1994 and 1998 Stability Agreements
5. Phelps Dodge Acquisition, SMCV Additional Investments, and Assessment of Construction of the Concentrator
6. Challenges to SMCV's profit reinvestment benefit, disputes as to scope of stability guarantees, and incorporation of SMM Cerro Verde
7. SMCV seeks clarification on scope of stability benefits, the 2012 Stability Agreement, and further legislative reform
8. SUNAT Assessments and Related Proceedings
III. THE PARTIES' CLAIMS AND REQUESTS FOR RELIEF
IV. LIABILITY
A. The Claim for Breach of Article 3.4 of the Treaty (Umbrella Clause)
1. The Parties' Positions
2. The Tribunal's Analysis
B. The Claim for Breach of Article 3.1 of the Treaty (Fair and Equitable Treatment and Non-Impairment)
1. Introduction
2. The Parties' Positions
3. The Tribunal's Analysis on the Claim for Breach of the FET Standard
4. The Tribunal's Analysis on the Claim for Breach of the Non-Impairment Standard
V. DAMAGES
1. The Parties' Positions
2. The Tribunal's Analysis
VI. COSTS
A. Claimant's Cost Submissions
B. Respondent's Cost Submissions
C. The Tribunal's Decision on Costs
VII. AWARD
APPENDIX I - THE QUESTION WHETHER CUSTOMARY INTERNATIONAL LAW REQUIRES INTERNATIONAL TRIBUNALS TO DEFER TO THE DECISIONS OF HIGH NATIONAL COURTS
APPENDIX II - LOGICAL TEST OF THE CENTRALITY ARGUMENT

I. INTRODUCTION AND PARTIES

1. This case concerns a dispute submitted to the International Centre for Settlement of Investment Disputes ("ICSID" or the "Centre") on the basis of the Agreement on Encouragement and Reciprocal Protection of Investments Between the Kingdom of the Netherlands and the Republic of Peru which entered into force on 21 November 1996 (the "BIT" or "Treaty") and the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, which entered into force on 14 October 1966 (the "ICSID Convention").

2. The claimant is SMM Cerro Verde Netherlands B.V. (the "Claimant" or "SMM Cerro Verde"), a limited liability company incorporated under the laws of the Netherlands, with its seat and office in Amsterdam.

3. The respondent is the Republic of Peru (the "Respondent" or "Peru").

4. The Claimant and the Respondent are collectively referred to as the "Parties." The Parties' representatives and their addresses are listed above on page (i).

5. This dispute relates to the Claimant's equity investment in Sociedad Minera Cerro Verde S.A.A. ("SMCV"), a Peruvian company operating the Cerro Verde Mine in Arequipa, Peru, and the Claimant's allegation that the Respondent breached its obligation to apply stability guarantees to SMCV's Concentrator. The Claimant alleges that by imposing penalties and interest on SMCV, the Respondent breached (i) Article 3.4 of the Treaty, which requires the Respondent to observe the obligations it entered into with regard to SMM Cerro Verde and (ii) Article 3.1 of the Treaty, which requires the Respondent to treat SMM Cerro Verde's investment fairly and equitably.

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VII. AWARD

1150. For the reasons set forth above, the Tribunal decides and declares as follows:

(1) By majority, that Peru is not in breach of Article 3.4 of the Treaty;

(2) By unanimity, that Peru is in breach of the FET Clause of Article 3.1 of the Treaty;

(3) By majority, that Peru is not in breach of the Non-Impairment Clause of Article 3.1 of the Treaty;

(4) By unanimity, that Peru is ordered to pay SMM Cerro Verde the sum of USD 141.2 million to compensate SMM Cerro Verde for the damages it suffered in the form of lost dividends, net of Peruvian tax, as a result of Peru’s: (i) arbitrary refusal to waive penalties and interest; (ii) arbitrary refusal to reimburse SMCV for the Q4 2011 to Q3 2012 GEM payments; and (iii) arbitrary calculations in the final and enforceable assessments of the 2007-2013 Income Tax, TTNA, AIT and CMPF Assessments as calculated to 1 July 2022;

(6) By unanimity, that Peru is ordered to pay annually compounding post-award interest on SMM Cerro Verde’s damages and losses at the rate of 7.3% compounded annually from the date of the Award to the date full payment of those amounts is made; and

(7) By unanimity, that Peru is ordered to pay the Claimant USD 546,740.60 for the expended portion of the Claimant’s advances to ICSID and USD 7,600,000 to cover its reasonable legal fees and expenses.

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Partial Dissent Mr. Oscar M. Garibaldi

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II. THE SCOPE OF THE PARTIAL DISSENT

4. This Partial Dissent concerns primarily certain aspects of the Majority’s analysis and conclusions on the Claimant’s claim for breach of Article 3.4 of the Treaty. For the sake of completeness, I also note here other, more limited, disagreements with the Majority concerning the claim for breach of Article 3.1 of the Treaty.

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Footnotes omitted