The Nuevo Pudahuel consortium, which has the concession to build and operate the new Pudahuel International Airport, has come into conflict with the Chilean State because international flights – almost all of them – and a large part of domestic flights have been substantially reduced during the period of the pandemic, which has decreased. obviously, your expected profits. Faced with this, they have requested that the terms of the concession be modified, extending the years of its validity, something that the Chilean State has not accepted. As this Nuevo Pudahuel consortium is led by French companies, it has decided to take the case to international arbitration.
For the purposes of such arbitration, the foreign company had two options. One of them was to be based on the “Agreement between the Government of the Republic of Chile and the Government of the Republic of France on the Promotion and Reciprocal Protection of Investments” signed between the two countries in 1992, which refers specifically – as the name implies – to the issue of investments and the possible disputes that may be generated in this field and to the way to resolve them. The other possibility was to appeal to the “Agreement establishing an Association between the European Community and its member states, of the one part, and the Republic of Chile, of the other part” which was signed in Paris in November 2002 and entered into force on 1 February 2003, which is essentially a free trade agreement, but it has a few important clauses referring to the promotion and protection of investments.
The two treaties have many similarities with each other and also some differences. The treaty with the European Community, to which France is a party, states that in the event of any dispute relating to the treaty – which concerns trade, investment and a whole host of other things – an arbitration panel may be used, after having tried to resolve the problem through direct talks. That arbitral panel shall be composed of three arbitrators: one appointed by each of the parties and a third appointed by common accord of the first two. That arbitral trio is sovereign in deciding, based on the terms of the agreement and international law, but not on the law of the respondent country.
The other treaty, the bilateral treaty between Chile and France, provides that in the event of any investment-related dispute, the affected party may appeal to arbitration by the International Centre for Settlement of Investment Disputes, ICSID, which has a series of pre-established protocols for this purpose, but which, with regard to the appointment of an ad hoc arbitral group, is almost the same as that established in the treaty with the European Community: a trio consisting of a representative of each of the parties to the conflict, and a third by common agreement. In any case, there is agreement that it is not resolved by taking into account the legislation of the country that is the seat of the dispute, but by accordance with the text of the treaty and international law.
There is, however, one difference that is important. If Chile were to denounce the bilateral treaty signed with France – that is, if it formally communicated that it does not wish to remain bound by the duties and rights established in that agreement – reciprocal investments would be left without the protection they enjoy today, since the treaty refers exclusively to it. But if the treaty signed with the European Community is denounced, what ceases to be valid is a trade agreement signed with several countries and, therefore, Chilean trade would suffer a major earthquake, since national exports would pass, from the moment the denunciation of the agreement enters into force, to have to pay tariffs when entering any country of the European Community. There would therefore be a very high cost to escape from that treaty. This would be, in all, a self-inflicted punishment on the part of the complainant country. It could be said that we are, in the latter case, in the presence of an international treaty that is much more shielded from possible denunciations than the bilateral investment promotion treaties signed at the beginning of the 90s.
From these brief reflections and information – without going into the basic issue of whether the reason is, in this specific case, on the part of the Nuevo Pudahuel Consortium or the Chilean state – referring only to the international law that has been generated with our multiple agreements and international treaties, it could be inferred that it is better, in future negotiationsones, separate what are trade treaties from what are investment protection treaties. And if it were possible, at some point in the future, to establish that disputes between a company operating in Chile and the Chilean state, be settled in Chile and in accordance with Chilean law. One day we will get there, but for now, we must not lose sight of it.
The content of this opinion column is the sole responsibility of its author, and does not necessarily reflect the editorial line or position of El Mostrador.
