Investment Treaty Arbitration

Investment Treaty Arbitration: Colombia

Overview of investment treaty programme

1. What are the key features of the investment treaties to which this country is a party?

Colombia

BIT Contracting Party or MIT

Substantive protections

Procedural rights

Fair and equitable treatment (FET)

Expropriation

Protection
and security

Most-favoured-nation (MFN)

Umbrella clause

Cooling-off period

Local courts 1

Arbitration

Belgium-Luxembourg Economic Union

(not in force)

Yes

Yes

Yes

Yes

No

7 months

Yes

Yes

Brazil (not in force) 2

No 3

Yes

No

Yes

No

No

No

No 4

China (2 July 2012)

Yes

Yes

Yes

Yes

No

9 months

Yes

Yes

France (not in force)

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

India (3 July 2012)

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

Japan (not in force)

Yes

Yes

Yes

Yes

Yes

7 months and 15 days

No

Yes

Peru (30 December 2010)

Yes

Yes

Yes

Yes

No

6 months

No

Yes

Republic of Korea (not in force)

Yes

Yes

Yes

Yes

No

9 months

Yes

Yes

Singapore (not in force)

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

Spain (22 September 2007)

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

Switzerland (6 October 2009)

Yes

Yes

*5

Yes

Yes

6 months

Yes

Yes

Turkey (not in force)

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

United Kingdom

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

 

FTAs/EPAs

Substantive protections

Procedural rights

Fair and equitable treatment (FET)

Expropriation

Protection and security

Most-favoured-
nation (MFN)

Umbrella clause

Cooling-off period

Local courts 6

Arbitration

Canada (15 August 2011)

Yes

Yes

Yes

Yes

No

No7

No

Yes

Chile (8 May 2009)

Yes

Yes

Yes

Yes

No

No8

No

Yes

Costa Rica (not in force)

Yes

Yes

Yes

Yes

No

6 months9

No

Yes

Israel (not in force)

Yes

Yes

Yes

Yes

No

6 months10

Yes

Yes

Mexico (1 January 1995)

No

Yes

No

Yes

No

No11

No

Yes

Northern Triangle (Guatemala, Honduras, El Salvador) (Guatemala: 12 November 2009; El Salvador: 1 February 2010; Honduras: 27 March 2010)

Yes

Yes

Yes

Yes

No

9 months12

No

Yes

Pacific Alliance (Colombia, Chile, Mexico, Peru) (not in force)

Yes 13

Yes

Yes

Yes

No

6 months

No

Yes

Panama (not in force)

Yes

Yes

Yes

Yes

No

3 months14

No

Yes

Republic of Korea (not in force)

Yes

Yes

Yes

Yes

No

8 months15

Yes

Yes

United States of America

(15 May 2012)

Yes

Yes

Yes

Yes

Yes

No16

No

Yes

Qualifying criteria - any unique or distinguishing features?

2. What are the distinguishing features of the definition of “investor” in this country’s investment treaties?

Colombia

Issue

Distinguishing features in relation to the definition of ‘investor’

Seat of the investor / business activities

Under all Colombian international investment agreements (IIAs), legal entities qualify as investors if they have been constituted or organised in accordance with the law of the Contracting Party (a country that is a party to such IIA). Some treaties have additional requirements:

The Switzerland, China, BLEU, UK, France, Brazil and Turkey BITs and the Northern Triangle FTA require that the legal entity have its seat and conduct substantial business activities in the territory of the Contracting Party.17

The Chile FTA requires that business activities be carried out in the territory of the Contracting Party.

The India, Japan and Korea BITs and the Israel and Panama FTAs require that substantial business activities be carried out in the territory of the Contracting Party.

The Spain BIT requires the legal entity to have its seat in the territory of the Contracting Party.

Entities controlled by an investor of a Party

Several Colombian IIAs include under the definition of ‘investor’ legal entities not established under the law of the Parties but effectively controlled by an investor of a Party (the China, Switzerland and France BITs and the Israel, Panama and Northern Triangle FTAs). The France BIT provides that such control may be direct or indirect.

Other persons that qualify as investors

In the Peru and Japan BITs and the Chile, Mexico, US, Canada, Korea, Costa Rica and Panama FTAs, the definition of ‘investor’ includes the Contracting Party or a state enterprise thereof.

Certain IIAs also include as an investor a branch located in the territory of a Party and carrying out business activities there (the US, Canada, Korea and Costa Rica FTAs and the Mexico and Chile BITs).

Permanent residents

Concerning natural persons, most Colombian IIAs only include as ‘investors’ nationals of the Parties. However, the Singapore and Brazil BITs and the Canada, Panama and Israel FTAs include permanent residents of a Party as investors. In case a person is a national of one Party and a permanent resident of the other, such person is deemed to be exclusively a national of the Party of which it is a citizen.

Dual nationals

Natural persons who are nationals of both Contracting Parties are not afforded protection under several Colombian IIAs (the BLEU, China, India, Singapore, Turkey and U.K. BITs and Israel and Panama FTAs). The Korea, US, Canada, Northern Triangle, Pacific Alliance and Chile FTAs and the Peru, Costa Rica, Spain and Korea BITs contain clauses whereby dual nationals are deemed nationals of the State of their dominant and effective nationality.18 Under the Switzerland, Brazil and Japan BITs, a dual national qualifies for protection as long as it has, at the time of the investment and ever since, been domiciled outside the territory of the Party in which the investment was made.

3. What are the distinguishing features of the definition of "investment" in this country’s investment treaties?

Colombia

Issue

Distinguishing features in relation to the concept of ‘investment’

Eligible assets

Most of Colombia’s IIAs refer to a non-exhaustive list of eligible assets, often using the phrase ‘every kind of asset’.

Minimum characteristics of an investment

Many Colombian IIAs set out that an investment is an asset having the characteristics of an investment, including: (i) the commitment of capital or other resources; (ii) the expectation of gain or profit and (iii) the assumption of risk.19 The France and U.K. BITs and the Israel FTA do not include an expectation of gain or profit as a characteristic of an investment. Some treaties qualify the risk (eg, the BLEU BIT refers to ‘reasonable risk’).

Exclusion of certain assets

A large number of Colombian IIAs explicitly exclude the following items from the definition of ‘investment’: (a) public debt operations and (b) claims to money arising solely from (i) commercial contracts for the sale of goods and services or (ii) credits granted in connection with commercial transactions.20

Additionally, the Peru and Japan BITs and the Chile, Panama, U.S., Canada, Pacific Alliance and Costa Rica FTAs explicitly exclude orders or judgments in a judicial or administrative procedure from the definition of ‘investment’. Investments made with money or assets linked to illegal activities are denied protection under the France BIT. The Switzerland BIT and the Mexico and Costa Rica FTAs exclude payment obligations or credits to States or State enterprises.

Under the Korea BIT and FTA market share, market access, expected gains and opportunity for profit-making are not, by themselves, investments.

Changes in the manner in which assets are invested or reinvested

Several Colombian IIAs explicitly provide that ‘any change in the form in which assets have been invested or reinvested does not affect their character as investment, provided such change is in accordance with the law of the Contracting Party’ (the Spain, Peru, China, BLEU, India, U.K., Japan, Singapore, France, Brazil and Turkey BITs and the Northern Triangle, Costa Rica and Israel FTAs).

Direct and indirect control of assets by investors

Under many Colombian IIAs, the definition of ‘investment’ explicitly refers to assets ‘owned or controlled, directly or indirectly’ by an investor of a Party.21 The Spain BIT refers to investments made by a domestic company, but owned or ‘effectively’ controlled by an investor of a Party.

Accordance with local laws

Many Colombian IIAs explicitly require that the investment be made ‘in accordance with the law’ of the host State in the definition of ‘investment’, including the Spain, China, BLEU, India, U.K., Korea, Brazil and France BITs and the Israel FTA.

Substantive protections - any unique or distinguishing features?

4. What are the distinguishing features of the fair and equitable treatment standard in this country’s investment treaties?

Colombia

Issue

Distinguishing features of the fair and equitable treatment standard

Illustrations of the FET standard

The majority of Colombia’s IIAs provide that each Party shall accord fair and equitable treatment (FET) to investments in accordance with customary international law. Several treaties specify that FET includes the obligation not to deny justice in criminal, civil, or administrative adjudicatory proceedings in accordance with the principle of due process embodied in the principal legal systems of the world.22 Many treaties link the FET standard with full protection and security (FPS), and some with the obligation not to impair the exercise of certain rights in connection with the investment through arbitrary and/or discriminatory measures (the Spain, U.K., Korea23 , France and Turkey BITs and the Israel FTA).

Customary international law /minimum standard of treatment

Most Colombian IIAs require that the host State provide FET ‘in accordance with customary international law’. Moreover, many treaties specify that the FET concept does not require additional treatment to that required under the minimum standard of treatment of aliens in accordance with the standard of customary international law,24 and some add that the FET standard does not create additional substantive rights.25 Also, some treaties include an annex or a footnote defining customary international law or the customary international law minimum standard of treatment.26

Regulatory powers

The U.K. and Singapore BITs include an understanding with regard to FET whereby the Contracting Parties state that, without wishing to narrow the meaning of the concept of FET as it is interpreted in international law, they do not understand this term to incorporate a stabilisation clause and thus, a Contracting Party is not prohibited from exercising regulatory powers, so long as these are exercised in a fair and equitable manner. Under the Japan BIT a change in regulation does not constitute by itself a violation of the FET standard, and the France BIT clarifies that the FET standard does not include a stabilisation clause nor does it impede a Contracting Party from adapting its legislation in accordance with the standard. Other treaties mentioning the States’ regulatory powers are the Turkey BIT and the Panama and Israel FTAs.

Other features

Following the 2009 Colombian Model BIT, many Colombian IIAs specify that a determination that there has been a breach of another provision in the treaty or in other international instruments, does not establish that there has been a breach of the FET standard.27 Under the France BIT, FET includes the obligation to act in a transparent, non-discriminatory and non-arbitrary manner, and it is deemed consistent with the principle of predictability and legitimate expectations.

5. What are the distinguishing features of the protection against expropriation standard in this country’s investment treaties?

Colombia

Issue

Distinguishing features of the ‘expropriation’ standard

Right to regulate for a public purpose

The right to regulate for a public purpose is expressly included in many of Colombia’s IIAs.

These generally provide that except in rare circumstances,28 non-discriminatory regulatory actions that are designed and applied to protect legitimate public welfare objectives, such as public health, safety and the environment, do not constitute expropriations.

Some of these treaties expressly clarify that the list of public welfare objectives is non-exhaustive, and some add other objectives such as public morals, public order and the protection of natural treasures (the Japan BIT) or real estate price stabilisation (the Korea FTA).

Indirect expropriation

Many investment treaties expressly protect against indirect expropriation, and list a series of factors to be considered in determining whether there has been an indirect expropriation.29

Most of these treaties provide that the determination of whether certain conduct constitutes an indirect expropriation requires a case-by-case, fact based inquiry that considers: the economic impact of the government action (although an adverse effect on the economic value of an investment, standing alone, does not establish that an indirect expropriation has occurred), the extent to which government action interferes with investment expectations,30 and the character of the government action. Certain treaties also mention other factors such as the object of the measure (the Japan and Turkey BITs and the Israel FTA), and whether the measure was discriminatory (the India BIT).

Expropriation in accordance with the ‘due process of law’

Most Colombian IIAs require that an expropriation be carried out in accordance with the due process of law.31

Limited application of the expropriation provision

Most of Colombia’s IIAs establish that the issuance of compulsory licences granted in accordance with the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement of the World Trade Organization (WTO) may not be challenged under the expropriation provision.

Taxation and expropriation

While several Colombian IIAs exclude taxation from the treaty’s scope of application, certain IIAs allow an investor to submit a claim to arbitration relating to a taxation measure where the expropriation provision is invoked as the basis of the claim (see, eg, the Switzerland, Peru, U.K. and Japan BITs and the Chile, Northern Triangle, U.S., Korea, Costa Rica and Canada FTAs). These treaties usually require that the matter be preliminarily examined by the competent tax authorities of the Parties.

Other features

Several of Colombia’s IIAs clarify that the Contracting Parties may establish monopolies provided they are for public purposes or social interest (see, eg, the China, BLEU, Japan, Turkey BITs and the Northern Triangle FTA). Some of these treaties also expressly add that there is to be prompt, adequate and effective compensation or that the expropriation provision applies to the establishment of monopolies.

6. What are the distinguishing features of the national treatment/most-favoured-nation treatment standard in this country’s investment treaties?

Colombia

Issue

Distinguishing features of the ‘national treatment’ and/or ‘most favoured nation’ standard

Scope

The MFN and national treatment (NT) provisions in Colombia’s FTAs generally apply to ‘investors’ and ‘covered investments’, with respect to the establishment, acquisition, expansion, management, conduct, operation and sale or other disposition of investments (eg, the Panama, Costa Rica, Korea, Canada, US, Northern Triangle, Pacific Alliance and Chile FTAs).

The MFN and NT provisions in Colombia’s BITs usually apply to ‘investors’ and to the investments of investors (eg, the Spain, Turkey, Singapore, Japan, India, BLEU and Brazil BITs). The MFN and NT clauses in the Korea BIT apply to investments done according to the laws and regulations, while in the France BIT they apply to investors and their investments and the activities related to their investments. The scope of application of these provisions varies in other treaties.32

Like circumstances

The vast majority of Colombian IIAs provide for MFN and NT, ‘in like circumstances’.

Exceptions to the MFN treatment

Most Colombian IIAs provide that the treatment referred to in the MFN clause does not encompass dispute resolution mechanisms provided for in other international investment treaties or trade agreements.

Also, most Colombian BITs state that MFN treatment does not extend to any treatment or privilege resulting from any existing or future free trade area, customs union common market or monetary union.

The Israel and Mexico FTAs and the France BIT state that the MFN clause does not apply to the definitions in each treaty, and certain IIAs clarify that the MFN treatment does not apply to privileges or treatment resulting from taxation matters in double taxation agreements (Mexico FTA and the Turkey, India and Switzerland BITs).33

Other features of MFN

Under the U.K. and France BITs, the protection under this provision does not preclude the possibility to adopt or enforce measures necessary to protect national security or public order.34

Limitations to the national treatment

The China BIT provides for NT, without prejudice to the host State’s law at the time the investment is made. Under the US, Canada, Pacific Alliance and Korea FTAs, national treatment means, with respect to a regional level of government treatment no less favourable than the most favourable treatment accorded in like circumstances, by that regional or sub-national level of government to investors and to investment of investors, of the Party of which it forms part.

Non-conforming measures

Most Colombian FTAs provide that MFN and NT do not apply to any existing non-conforming measures maintained at the central or local level of government, its continuation or prompt renewals or its amendments. MFN and NT also do not apply in respect to certain sectors or activities as set out in the schedules or non-conforming measures in each treaty.

7. What are the distinguishing features of the obligation to provide protection and security to qualifying investments in this country’s investment treaties?

Colombia

Issue

Distinguishing features of the ‘protection and security’ standard

Scope

The majority of Colombia’s IIAs provide that each Contracting Party shall accord FPS.

The U.S., Chile, Korea, Pacific Alliance and Panama FTAs and the Peru and Korea BITs, require the Contracting Parties to provide the level of police protection required under customary international law.35 Other treaties provide that the FPS standard does not imply a level of police protection36 or a level of treatment37 that is more favourable or better than that accorded to nationals of the Party where the investment was made.

Under the France BIT, the obligation to provide FPS requires that each party accord the investors and their investments protection against physical and material damages.

Customary international law

Many of Colombia’s IIAs provide that each Party shall accord FPS to investments in accordance with customary international law.38

As in the case of FET, many treaties specify that providing FPS does not require additional treatment to that required under that standard, international law or the minimum standard of treatment of aliens in accordance with the standard of customary international law,39 and some treaties add that the FPS standard does create additional substantive rights.40

Other features

Many Colombian IIAs specify that a determination that there has been breach of another provision in the treaty or in other international instruments, does not establish that there has been a breach of the FPS standard.

In addition, several treaties specifically state that the FPS standard does not implicate providing a superior treatment to foreign investments compared to domestic investments (China, BLEU, India, UK, Singapore and Turkey BITs and the Northern Triangle, Costa Rica and Israel FTAs).

8. What are the distinguishing features of the umbrella clauses contained within this country’s investment treaties?

Colombia

Issue

Distinguishing features of any ‘umbrella clause’

Scope

As a general rule, Colombian investment treaties reject the inclusion of umbrella clauses. The only Colombian IIAs that include umbrella clauses are the US FTA and the Switzerland and Japan BITs.

Qualification of the obligation

Under the Japan and Switzerland BITs each Contracting Party shall observe any obligation deriving from a written agreement concluded between its central government or agencies thereof and an investor of the other Contracting Party with regard to specific investments by the investor, which the investor could have relied on at the time of the establishment, acquisition or expansion of such investments. However, under both BITs the Parties did not consent to investor-state arbitration when an investor argues there is a breach of the umbrella clause.

The US FTA includes an umbrella clause within the dispute-settlement section.41 A claimant may submit to arbitration the alleged breach of an ‘investment agreement’. An investment agreement is defined as a written agreement between a national authority of a Party and a covered investment or an investor of another Party, on which it relies, that grants rights with respect to certain sectors (natural resources, the supply of certain services and infrastructure projects).

9. What are the other most important substantive rights provided to qualifying investors in this country?

Colombia

Issue

Other substantive protections

Free transfer of payments

All Colombian IIAs provide for the free transfer of payments. The treaties generally require that transfers relating to investments be freely made and without delays. The UK and France BITs refer to ‘investments and returns’, while the China BIT and the Northern Triangle FTA provide that the Contracting Parties shall allow free transfers, prior fulfilment of the requirements under its law. Several IIAs include a provision stating that a Contracting Party may condition or prevent a transfer through the equitable, non-discriminatory and good faith application of its laws, including those relating to bankruptcy proceedings, company restricting or insolvency, compliance with judicial, arbitral or administrative decisions or awards, compliance with labour or tax obligations and/or the issuing trading and dealing with securities, among others. Some treaties further provide that a Party may adopt or maintain measures not conforming with its obligations under this provisions in the event of serious balance of payments and external financial difficulties or where, in exceptional circumstances, movements of capital, cause or threaten to cause serious difficulties for macroeconomic management, in particular monetary and exchange rate policies.42

Non-impairment

Certain Colombian BITs provide that the Contracting Parties shall not impair by arbitrary and/or discriminatory measures the management, maintenance, use, enjoyment, extension, sale and liquidation of said investments (see, the Spain, BLEU, Switzerland, India, UK BITs). The Korea BIT refers to disproportionate or discriminatory measures, while the Israel FTA provides that the FET standard includes the prohibition to impair the management, maintenance, use, enjoyment, extension or sale of said investments with discriminatory measures.

Armed conflict / civil unrest

The vast majority of Colombian BITs and the Israel FTA guarantee investors of Contracting Parties MFN and NT regarding compensation paid to other investors in case or armed conflict, state of emergency, civil disturbance or any other similar event. The Peru BIT and the Chile, US, Canada, Korea, Costa Rica FTA provide for non-discriminatory treatment regarding such compensation for loss. Certain treaties also provide for a qualified right to receive compensation for losses caused by the forces or authorities of the host State (the UK, France, Turkey and Korea BITs and the US and Israel FTA).

Procedural rights in this country’s investment treaties

10. Are there any relevant issues related to procedural rights in this country’s investment treaties?

Colombia

Issue

Procedural rights

Fork-in-the-road

As a general rule, Colombian IIAs contain a fork-in-the-road-provision. Some IIAs provide that the election to submit a dispute to arbitration may not preclude an investor to initiate or continue proceedings in local courts to obtain interim relief, provided these proceedings do not involve payment of monetary damages and are brought for the sole purpose of preserving the investors rights and interests during the pendency of the arbitration (the Peru, China, Korea, Japan and Singapore BITs, and the Chile, Panama, Northern Triangle, U.S., Canada, Israel and Costa Rica FTAs).

Exhaustion of non-judicial administrative remedies

The exhaustion of non-judicial administrative remedies when local legislation so requires, has been included in several of Colombia’s IIAs (eg, the Spain, Peru, China, BLEU, India, UK, Korea, Japan and Singapore BITs and the Northern Triangle, Costa Rica, Panama and Israel FTAs). Under the Canada FTA, investors should make every effort to exhaust administrative recourse under Colombian law, and an investor that fails to exhaust administrative recourse where applicable shall submit its notice of intent nine months prior to submitting a claim to arbitration.

Time limits

Colombian investment treaties provide for a limitation period within which claims must be brought by the investor: three years (the Spain, China, India, Japan and France BITs and the Northern Triangle, Panama, Israel, Costa Rica and US FTAs), 39 months (the Peru and Korea BITs and the Chile and Canada FTAs), 60 months (the BLEU BIT), four years (the France BIT) or five years (the Switzerland, UK and Turkey BITs).

ICSID or ad hoc arbitration

Most Colombian IIAs provide that an investor has the choice between presenting its claim in either ICSID or UNCITRAL arbitration. Certain treaties also provide for ad hoc and/or institutional arbitration under any arbitration rules, if the parties so agree (the Peru, China, Korea, Japan, Singapore and France BITs and the Panama, Costa Rica, Northern Triangle, US, Pacific Alliance and Korea FTAs). Other treaties also provide for International Chamber of Commerce arbitration or arbitration under the rules of the Conciliation and Arbitration Centre of the Bogotá Chamber of Commerce (the BLEU and UK BITs).

Waiver of local remedies

Some Colombian IIAs provide for the waiver of the right to demand that all domestic judiciary remedies be exhausted (eg, the BLEU BIT and the Chile, Panama, Northern Triangle, Costa Rica, Canada and U.S. FTAs).

Preliminary issues

Generally, Colombian IIAs provide that the arbitral tribunal has the power to rule on preliminary questions of competence and admissibility, before ruling on the merits of the dispute, and whether the claims or objections of the parties are frivolous or not (the China, India, UK, Korea, Japan, France and Turkey BITs and the Chile, Northern Triangle, US, Korea, Costa Rica, Pacific Alliance and Panama FTAs).

Relief granted by tribunals

Certain IIAs establish that the tribunals may declare a breach of the provision of the investment treaty and award monetary damages, applicable interests, costs and attorneys’ fees, but the tribunal is not competent to rule on the legality of the measure under domestic law (eg, the China, BLEU, India, UK, France and Turkey BITs and the Costa Rica FTA). The Japan and Singapore BITs and the Chile, Korea, Costa Rica and US, and Pacific Alliance FTAs also provide that the arbitral tribunal may order the restitution of property, but that it may not award punitive damages. The France BIT and the Korea FTA provide that the tribunal may award any type of relief, subject to the agreement of the parties to the arbitration.

11. What is the status of this country’s investment treaties?

Colombia

Colombia has been actively negotiating IIAs with States of almost every continent, and it continues open to negotiating new investment agreements. IIAs have been considered a key instrument in the attraction of foreign investment in Colombia. There is no indication that Colombia will not renew its investment treaties, decline to agree to investor-state dispute settlement provisions in future cases or renounce to its membership of ICSID.

Practicalities of commencing an investment treaty claim against this country

12. To which governmental entity should notice of a dispute against this country under an investment treaty be sent? Is there a particular person or office to whom a dispute notice against this country should be addressed?

Colombia

Government entity to which claim notices are sent

Most IIAs set forth that notices of disputes against Colombia should be sent to the Foreign Investment Division of the Ministry of Commerce, Industry and Tourism. The 2009 Model IIA (Annex 1) provides that that a notice of intent to submit a request for arbitration is to be sent to the Ministry’s Foreign Investment Division.

13. Which government department or departments manage investment treaty arbitrations on behalf of this country?

Colombia

Government department which manages investment treaty arbitrations

The Ministry of Commerce, Industry and Tourism, with the support of the National Agency for the Legal Defence of the State.

14. Are internal or external counsel used, or expected to be used, by the state in investment treaty arbitrations? If external counsel are used, does the state normally go through a formal public procurement process when hiring them?

Colombia

Internal/external counsel

External counsel are selected and used by Colombia in investment treaty arbitrations, following a procurement process.

Practicalities of enforcing an investment treaty claim against this country

15. Has the country signed and ratified the Washington Convention on the Settlement of Investment Disputes between States and Nationals of Other States (1965)? Please identify any legislation implementing the Washington Convention.

Colombia

Washington Convention implementing legislation

Law 267 of 1995 (25 January 1995).

16. Has the country signed and ratified the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958) (the New York Convention)? Please identify any legislation implementing the New York Convention.

Colombia

New York Convention implementing legislation

Law 39 of 1990 (20 November 1990).43

17. Does the country have legislation governing non-ICSID investment arbitrations seated within its territory?

Colombia

Legislation governing non-ICSID arbitrations

The law applicable to international arbitrations seated in Colombia is Law 1563 of 2012 (12 July 2012), which is based in the UNCITRAL Model Law.

18. Does the state have a history of voluntary compliance with adverse investment treaty awards; or have additional proceedings been necessary to enforce these against the state?

Colombia

Legislation governing non-ICSID arbitrations

The law applicable to international arbitrations seated in Colombia is Law 1563 of 2012 (12 July 2012), which is based in the UNCITRAL Model Law.

19. Describe the national government’s attitude towards investment treaty arbitration

Colombia

Attitude of government towards investment treaty arbitration

The Colombian government has been generally favourable to investment treaty arbitration, as seen by its continued negotiation of IIAs including investor-state dispute resolution clauses.

20. To what extent have local courts been supportive and respectful of investment treaty arbitration, including the enforcement of awards?

Colombia

Attitude of local courts towards investment treaty arbitration

To date there have been no investment treaty awards sought to be enforced in Colombia (against Colombia, or otherwise). However, Colombian courts have been generally supportive and respectful of international commercial arbitration and the enforcement of foreign arbitration awards in Colombia.

National legislation protecting inward investments

21. Is there any national legislation that protects inward foreign investment enacted in this country? Describe the content.

Colombia

National legislation

Substantive protections

Procedural rights

FET

Expropriation

Other

Local courts

Arbitration

Colombian Constitution (1991)

No

Yes

No

Yes

No

Decree 2080, 18 October 2000 (General framework governing foreign capital investment in Colombia and Colombian capital investment abroad)

No

No

Non-discrimination

No44

No

National legislation protecting outgoing foreign investment

22. Does the country have an investment guarantee scheme or offer political risk insurance that protects local investors when investing abroad? If so, what are the qualifying criteria, substantive protections provided and the means by which an investor can invoke the protections?

Colombia

Relevant guarantee scheme

Qualifying criteria, substantive protections provided and practical considerations

Multilateral Investment Guarantee Agency (MIGA)

Colombia is a party to the MIGA Convention (Law 149, 15 July 1994). Under the MIGA Convention, investors of MIGA member countries (including Colombia) are eligible to acquire non-commercial political risk insurance in certain developing countries. MIGA’s guarantees can aid investors in obtaining access to funding with improved financial terms and conditions.

Awards

23. Please provide a list of any available arbitration awards or cases initiated involving this country’s investment treaties.

Colombia

No awards have been rendered against Colombia under its investment treaties. According to publicly available information, the following are investment arbitrations initiated against Colombia:

Glencore International A.G. and C.I. Prodeco S.A. v. Republic of Colombia (ICSID Case No. ARB/16/6).

Cosigo Resources, Ltd., Cosigo Resources Sucursal Colombia, Tobie Mining and Energy, Inc. v. Republic of Colombia (UNCITRAL).

Reading List

24. Please provide a list of any articles or books that discuss this country’s investment treaties.

Colombia

José Antonio Rivas, ‘Colombia’, in Chester Brown (ed.), Commentaries on Selected Model Investment Treaties (2013).

Hernando Otero, Enrique Gómez-Pinzón, ‘Colombia’, in Jonathan C. Hamilton, Omar E. García-Bolivar, Hernando Otero (eds.), Latin American Investment Protections: Comparative Perspectives on Laws, Treaties, and Disputes for Investors, States, and Counsel (2012).

Notes

1 The answer ‘Yes’ indicates that the treaty expressly grants an investor the right to bring a dispute under the treaty before local courts, while the answer ‘No’ indicates that the right to submit a claim before local courts is not expressly included in the treaty. For instance, the Colombia-BLEU BIT provides that the dispute may be submitted either to the competent jurisdiction of the Contracting Party or to domestic or international arbitration.

2 Investment Cooperation and Facilitation Agreement between the Republic of Colombia and the Federal Republic of Brazil. The Brazil-Colombia Treaty is referred to throughout the text as the ‘Brazil BIT’.

3 While the Brazil-Colombia treaty does not include a fair and equitable treatment clause, it provides protection against denial of justice and due process violations.

4 The Parties did not provide for investor-State arbitration in the Colombia-Brazil treaty. However, they agreed to a state-state dispute resolution mechanism covering disputes that affect investors. The Parties must first submit these matters to the Joint Committee before initiating arbitration.

5 The Switzerland BIT does not explicitly provide for ‘full protection and security’ nor for ‘protection and security’, but it does include a provision whereby ‘[e]ach Party shall protect within its territory investments made in accordance with its laws and regulations by investors of the other Party and shall not impair by unreasonable or discriminatory measures the management, maintenance, use, enjoyment, extension, sale and, should it so happen, liquidation of such investments’. This provision has been included in certain Colombian BITs, which also expressly provide for ‘full protection and security’ (eg, the UK and India BITs). Some tribunals have interpreted a similar provision including the terms ‘shall protect’, comparing it with other protection and security provisions in different treaties (Suez, Sociedad General de Aguas de Barcelona SA, and Vivendi Universal SA v Argentine Republic, ICSID Case No. ARB/03/19, Decision on Liability of 30 July 2010, ¶¶ 158-159) or concluding that there is an overlap between the protection granted under such a provision and a ‘full protection and security’ clause (Toto Costruzioni Generali S.p.A. v. The Republic of Lebanon, ICSID Case No. ARB/07/12, Award of 7 June 2012, ¶ 171).

6 See footnote 1 above.

7 The Canada FTA provides that consultations shall be held within 30 days of the submission of the notice of intent, unless the parties agree otherwise. Under the treaty, an investor may submit a claim to arbitration if at least 6 months have elapsed since the events giving rise to the claim and if the investor has delivered a notice of intent at least six months before submitting the claim.

8 The Chile FTA provides that an investor may submit a claim to arbitration provided six months have passed since the measures giving rise to the claim, and 180 days after it had presented the notice of intent.

9 The Costa Rica FTA requires the investor to deliver its notice of intent at least 90 days before submitting any claim to arbitration.

10 Under the treaty, the investor shall deliver its notice of intent at least 90 days before submitting any claim to arbitration.

11 Under the Mexico FTA, an investor may submit a claim to arbitration provided 90 days have elapsed since it presented a communication to the state party informing of such a claim, and provided six months have passed since the measures giving rise to the claim.

12 The investor shall deliver its notice of intent at least 90 days before submitting any claim to arbitration.

13 The treaty provides for treatment according to customary international law, including fair and equitable treatment and full protection and security.

14 The Panama BIT provides that consultations between the parties shall be carried out for at least three months, and that an investor may submit a claim to arbitration provided 9 months have elapsed since the events giving rise to the claim. Also, the investor shall deliver its notice of intent at least 180 days before submitting any claim to arbitration.

15 The Korea FTA also adds that a claimant may only submit a claim to arbitration if the claimant has delivered to the respondent a notice of intent at least 90 days before the claim to arbitration is submitted.

16 Under the U.S. FTA, an investor may submit a claim to arbitration provided six months have elapsed since the events giving rise to the claim. Also, the investor shall deliver its notice of intent at least 90 days before submitting any claim to arbitration.

17 The Switzerland BIT uses the expression ‘real business activities’, instead of ‘substantial business activities’.

18 The Spain BIT only refers to ‘effective’ nationality.

19 These IIAs are the China, BLEU, India, Singapore, Turkey and Korea BITs and the Chile, Northern Triangle and Panama FTAs. Certain IIAs only require that there be one of these characteristics of an investment, by replacing the word ‘and’ for ‘or’ (US, Korea and Costa Rica FTAs and the Peru and Japan BIT).

20 These IIAs include the Peru, China, BLEU, India, UK, Korea, Singapore, Turkey, Brazil and France BITs and the Northern Triangle, Israel, Panama and Costa Rica FTAs. Regarding claims to money, the Spain and Switzerland BITs only exclude such claims that arise solely from credits in connection with a commercial transaction with a maturity date of less than three years. The Japan BIT applies the same standard for credits with a maturity date of less than 12 months. Although under the Korea FTA, an investment does not mean a public debt operation, public debt operations are subject to National Treatment and Most Favoured Nation Treatment.

21 These treaties include the Peru, UK, Korea, Japan and Singapore BIT and the Chile, Northern Triangle, U.S., Korea, Pacific Alliance and Costa Rica FTAs. The BLEU BIT includes economic assets that, directly or indirectly, have been invested and reinvested by investors.

22 These IIAs are the Peru, BLEU, UK, Korea, Singapore and Korea BITs and the Chile, Northern Triangle, US, Korea, Costa Rica, Pacific Alliance and Panama FTAs. The China BIT refers to the obligation not to deny justice in judicial proceedings ‘in accordance with the general accepted principles of customary international law’, while the France, Japan, Turkey and India BITs and the Canada FTA make reference to the ‘principle of due process’ without further qualifying the concept. The Japan BIT also states that FET includes access to courts.

23 The Korea BIT refers to ‘disproportionate’ or discriminatory measures.

24 Treaties which use this or similar formulas (which make reference either to the minimum standard of treatment, to customary international law or to international law) include the Peru, China, BLEU, Chile, UK, Singapore, Japan, Turkey and Korea BITs and the Chile, Northern Triangle, US, Canada, Costa Rica, Panama, Pacific Alliance and Korea FTAs.

25 These include the Peru, Korea and Singapore BITs and the Chile, Northern Triangle, US, Korea, Costa Rica, Pacific Alliance and Panama FTAs.

26 These include the Peru and Singapore BITs and the Chile, US, Canada, Pacific Alliance and Korea FTAs.

27 These include the Peru, China, BLEU, India, UK, Korea, Japan, Singapore, France and Turkey BITs and the Chile, Northern Triangle, US, Canada, Korea, Costa Rica, Panama and Israel FTAs.

28 Some treaties also qualify these ‘circumstances’ with wording similar to the following: ‘where those actions are so severe that they cannot be reasonably viewed as having been adopted and applied in good faith’ (see, eg, the India, Korea, BLEU and China BITs and the Costa Rica, Panama, Northern Triangle and Canada FTAs) or ‘where an action or a series of actions is extremely disproportionate in light of its purpose and effect’ (the Korea FTA).

29 These include the Peru, China, BLEU, India, Korea, Japan, Singapore, France and Turkey BITs and the Chile, Northern Triangle, US, Canada, Korea, Costa Rica, Panama, Pacific Alliance and Israel FTAs.

30 Many IIAs qualify these expectations as ‘reasonable and distinct expectations’, while certain treaties also speak of ‘investment-backed expectations.’

31 The China BIT refers to ‘domestic legal procedure’ and ‘respecting due process’, while the India BIT uses the terms ‘in accordance with the law’, the Korea BIT refers to ‘principle of due process of law embodied in the principal legal systems of the world’ and the Mexico FET to the ‘principle of legality’.

32 For instance, in the Japan BIT, the MFN clause applies with respect to investment activities, and in the BLEU BIT it applies in respect of all matters covered by the provisions of the treaty.

33 The Singapore BIT excludes the application of the MFN clause to any existing bilateral investment agreement or ASEAN agreement and to agreements to promote regional cooperation, in respect of specific projects. The Korea BIT excludes from MFN and NT public procurement, certain subsidies granted by a Contracting Party and taxation measures. Some FTAs (eg, the Panama, U.S. and Canada FTAs) also exclude the application of MFN and NT to public procurement and subsidies.

34 The France BIT also adds that these measures may not be arbitrary.

35 Under the Turkey BIT the parties are required to provide the level of police protection required by international law.

36 These include the Singapore BIT and the Costa Rica and Israel FTAs.

37 Eg, the China, BLEU, India, UK and Turkey BITs and the Northern Triangle FTA.

38 See, eg, the Peru, BLEU, Korea, Japan, Singapore and France BITs and the Chile, US. Korea, Costa Rica, Pacific Alliance and Panama FTAs. Under the Turkey BIT and the Canada FTA, the Contracting Parties shall accord full protection and security in accordance with the minimum standard of treatment.

39 These include the Peru, India, China, BLEU, Singapore, Japan and Korea BITs and the Chile, US, Canada, Costa Rica, Panama and Korea FTAs.

40 Eg, the Peru, Korea and Singapore BITs and the Chile, US, Korea, Costa Rica and Panama FTAs.

41 It should be noted that certain government officials in Colombia’s IIA negotiating team have stated that this provision is not, in the usual sense, an umbrella clause.

42 Eg, the BLEU, Korea and India BITs and the Israel and Korea FTAs.

43 The Colombian Congress first approved the New York Convention through Law 37 of 1979, and later through Law 39 of 1990. The 1979 law was declared unconstitutional for technical reasons by the Supreme Court of Justice, through a decision dated 6 October 1988. Nonetheless, Colombia did not denounce the Convention. Rather, it ratified the treaty’s continued effectiveness with new implementing legislation in 1990. The continuing effect of the New York Convention (in spite of the 1988 decision), was acknowledged by the Supreme Court itself in a decision dated 20 November 20, 1993.

44 Decree 2080 of 2000 does not provide for specific dispute resolution procedures regarding investors’ substantive rights under the Decree. However, according to article 14, Colombian law applies to the settlement of disputes or conflicts arising from the application of foreign capital investment provisions, except as provided in international treaties or conventions.

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