Investment Treaty Arbitration

Investment Treaty Arbitration: Peru

Overview of investment treaty programme

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

Peru

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

Arbitration

Argentina (24 October 1996)

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

Australia (2 February 1997)

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

BLEU (Belgium-Luxembourg Economic Union) (12 September 2008)

Yes

Yes

Yes2

Yes

No

6 months

Yes

Yes

Bolivia, Plurinational State of (19 March 1995)

Yes

Yes

Yes3

Yes

No

6 months

Yes

Yes

Canada (20 June 2007)

Yes

Yes

Yes

Yes4

No

6 months

Yes5

Yes

Chile (11 August 2001)

Yes6

Yes

Yes

Yes

No

6 months

No

Yes

China (1 February 1995)

Yes

Yes

Yes7

No

No

6 months

No

Yes

Colombia (30 December 2010)

Yes

Yes

Yes

Yes

No

6 months

No

Yes

Cuba (25 November 2001)

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

Czech Republic (6 March 1995)

Yes

Yes

Yes

Yes

No

6 months

No

Yes

Denmark (17 February 1995)

Yes

Yes

Yes

Yes

Yes

3 months

No

Yes

Ecuador (9 December 1999)

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

El Salvador (15 December 1996)

Yes8

Yes

Yes

Yes

No

3 months

Yes

Yes

Finland (14 June 1996)

Yes

Yes

Yes

Yes

No

6 months

No

Yes

France (30 May 1996)

Yes

Yes

Yes

Yes

No

6 months

No

Yes

Germany (1 May 1997)

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

Italy (18 October 1995)

Yes

Yes

No

Yes

No

6 months

Yes

Yes

Japan (10 December 2009)

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

Korea, Republic of (20 April 1994)9

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

Malaysia (25 December 1995)

Yes

Yes

Yes

Yes

No

No

No

Yes

Netherlands (1 February 1996)

Yes

Yes

Yes

Yes

Yes

3 months

No

Yes

Norway (9 May 1995)

Yes

Yes

Yes10

Yes

No

6 months

No

Yes

Paraguay (18 December 1994)

Yes

Yes

Yes11

Yes

Yes

6 months

Yes

Yes

Portugal (18 October 1995)

Yes

Yes

Yes12

Yes

Yes

6 months

Yes

Yes

Romania (1 January 1995)

Yes

Yes

No

Yes

Yes

6 months

Yes

Yes

Singapore (not in force)13

Yes

Yes

Yes14

Yes

No

6 months

No

Yes

Spain (16 February 1996)

Yes

Yes

Yes15

Yes

No

6 months

Yes

Yes

Sweden (1 August 1994)

Yes

Yes

Yes

Yes

No

3 months

Yes

Yes

Switzerland (23 November 1993)

Yes

Yes

Yes16

Yes

Yes

No

Yes

Yes

Thailand (15 November 1991)

Yes

Yes

Yes17

Yes

Yes

No

No

Yes

United Kingdom (21 April 1994)

Yes

Yes

Yes

Yes

Yes

3 months

No

Yes

Venezuela, Bolivian Republic of (18 September 1997)

Yes

Yes

Yes

Yes

Yes

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

Arbitration

Canada (1 August 2009)

Yes

Yes

Yes

Yes

No

6 months

No

Yes

Chile (1 March 2009)

Yes

Yes

Yes

Yes

No

6 months

No

Yes

China (1 March 2010)

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

Costa Rica (1 June 2013)

Yes

Yes

Yes

Yes

No

6 months

No

Yes

European Free Trade Association (1 July 2011)

N/A18

N/A

N/A

N/A

N/A

N/A

N/A

N/A

European Union (1 March 2013)

No19

No

No

No

No

No

No

No

Guatemala (signed 6 December 2011 but not in force)

Yes

Yes

Yes

Yes

No

6 months

No

Yes

Japan (1 March 2012)

Yes

Yes

Yes

Yes

No

No

No

Yes

Honduras (signed 29 May 2015 but not in force)

Yes

Yes

Yes

Yes

No

6 months

No

Yes

MERCOSUR (20 December 2005)

N/A20

N/A

N/A

N/A

N/A

N/A

N/A

N/A

Mexico (1 February 2012)

Yes

Yes

Yes

Yes

No

6 months

No

Yes

Pacific Alliance (20 July 2015)

Yes

Yes

Yes

Yes

No

6 months

No

Yes

Panama (1 May 2012)

Yes

Yes

Yes

Yes

No

6 months

No

Yes

Singapore (1 August 2009)

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

South Korea (1 August 2011)

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

Thailand (31 December 2011)

Yes21

Yes

Yes22

Yes

Yes

No

No

Yes

Trans-Pacific Partnership Agreement (signed 4 February 2016 but not in force)

Yes

Yes

Yes

Yes

No

6 months

No

Yes

United States of America (1 February 2009)

Yes

Yes

Yes

Yes

No

6 months

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?

Peru

Issue

Distinguishing features in relation to the definition of ‘investor’

Seat of the investor/place of

Business

A number of Peruvian investment treaties provide that a company duly incorporated, constituted, set up or otherwise organised under the law of a Contracting Party qualifies as an ‘Investor’ or such equivalent term (eg, ‘National’, ‘Enterprise’ or ‘Company’) as used in certain treaties. The exceptions are the Argentina, Chile, China, Czech Republic, Denmark, Ecuador, Finland, France, Germany, Italy, Romania, Spain, Sweden, Switzerland and Venezuela BITs, and the FTA for the European Free Trade Association (EFTA), where the company is also required to have, inter alia, its seat, domicile, headquarters, substantive business operations and /or real economic activities in the jurisdiction of the Contracting Party.

Control by a non-national

Companies, enterprises or corporations covered by most of Peru’s BITs are not subject to requirements that they be owned or controlled by nationals of a Contracting Party, with the exception of the Bolivia, China (where only Peruvian companies have ownership/control requirements), Denmark, Paraguay, Romania and Venezuela BITs. The Canada BIT allows denial of benefits to an investor if it is owned or controlled by an investor of a non-party, if said non-party is subject to measures prohibiting transactions with the non-party or its enterprises and such measures would be violated or circumvented. The UK BIT stipulates that a company incorporated under the law of one Contracting Party but which, before a dispute arises, is majority owned by nationals or companies of the other Contracting Party shall be deemed to be a company of the other Contracting Party.

Permanent residents

The term ‘Investor’ or equivalent, in most of Peru’s BITs, only extends to ‘nationals’ of Contracting States and not to permanent residents. These include the Argentina, BLEU, Bolivia, Chile, China, Czech Republic, Cuba (Cuban PRs allowed but not Peruvian PRs), Denmark, Ecuador, El Salvador, Finland, France, Germany, Italy, Japan, the Netherlands, Norway, Paraguay, Portugal, Romania, Singapore, Spain, Sweden, Switzerland, Thailand, UK and Venezuela BITs. Peru’s FTAs mostly also extend protection to permanent residents, with the exception of the EFTA and Mexico FTAs. Note that the under the China, Japan and South Korea FTAs, the term ‘national’ applies to Peruvian permanent residents but only to citizens of the counterparty Contracting State.

Dual nationals

The majority of Peru’s BITs are silent as to dual nationals. Under the Argentina BIT, nationals of Peru who have been domiciled in Argentina for more than 2 years are excluded from BIT protection. The Canada BIT and the Singapore FTA stipulates that a dual national is deemed to be exclusively a citizen of the State of his/her ‘dominant and effective’ citizenship.

Interplay with other

investment treaties

The BITs of the Republic of Korea and Singapore have been superseded by the FTAs of both countries. The Peru-Thailand FTA states that it ‘shall be construed in accordance’ with the Peru-Thailand BIT. The Peru-EFTA FTA is ‘without prejudice to…other international investment agreements, to which Peru and an EFTA State are parties’, and thus the BITs between Peru and Iceland, Norway and Switzerland entered into separately apply to the bilateral investments between the respective States.

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

Peru

Issue

Distinguishing features in relation to the concept of ‘investment’

Assets which qualify for protection

Most Peruvian BITs include in the definition of ‘investment’ - ‘every kind of asset’ owned or controlled by an investor. The Denmark, Italy and Japan BITs have particularly expansive definitions, with Denmark allowing assets ‘connected with economic activities acquired for the purpose of establishing lasting economic relations’, Italy including increases in original investment value, and Japan allowing assets which have ‘the characteristics of an investment, such as the commitment of capital or other resources, the expectation of gain or profit, or the assumption of risk…’, to qualify as investments. Chile, China, Cuba, Ecuador and Romania explicitly include reinvestment of profits within the definition of investment.

Indirect control of assets

Most Peruvian BITs do not explicitly state that indirect control of assets comes within their protective ambit, with the exception of Ecuador, BLEU and Japan. The French BIT, while silent generally on indirect control of assets, suggests that indirectly held shares may be eligible for protection.

Exclusion of certain assets

The BLEU, Canada, Cuba and Japan BITs explicitly exclude various assets, such as loans made to State companies, as well as loans which do not meet certain maturity thresholds, from the protective ambit of the treaties.

Commencement of treaty protection

The majority of Peruvian BITs apply to investments made prior to the BITs coming into force, although these generally exclude disputes which arose in that prior period. The China, Czech Republic, Germany, the Netherlands, Spain, Switzerland and UK BITs do not expressly exclude disputes arising from investments made prior to the entry into force of their BITs.

Admission/approval of an investment

The Australian BIT requires investments to have been ‘admitted’ by a Contracting Party. None of Peru’s remaining BITs have a similar stipulation.

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?

Peru

Issue

Distinguishing features of the fair and equitable treatment standard

Illustrations of the FET standard

The vast majority of Peru’s investment treaties provide for fair and equitable treatment of investments as a minimum standard, with eleven treaties prescribing in greater detail that such treatment includes an obligation not to deny justice in criminal, civil or administrative litigation (or adjudicatory as the case may be) procedures, in accordance with the principle of due process embodied in the principal legal systems of the world. These are the Chile, China, Costa Rica, Guatemala, Panama, Singapore, South Korea, United States, Honduras, Pacific Alliance FTAs and the Trans-Pacific Partnership Agreement.

Customary international law

Thirteen of Peru’s investment treaties equate ‘fair and equitable treatment’ with the concept of fair and equitable treatment under customary international law. These are the Canada, Chile, China, Costa Rica, Guatemala, Mexico, Panama, Singapore, South Korea, United States, Honduras Pacific Alliance FTAs and the Trans-Pacific Partnership Agreement.

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

Peru

Issue

Distinguishing features of the ‘expropriation’ standard

Right to regulate for a public purpose

All Peruvian investment treaties protect against expropriation without compensation, but the FTAs for Chile, Costa Rica, Guatemala, Panama, Singapore, South Korea, USA, Honduras, Pacific Alliance, Trans-Pacific Partnership Agreement and the BIT for Canada contain exceptions for certain licences or rights in relation to intellectual property.23

Indirect expropriation

Most of Peru’s BITs including the El Salvador, Canada, Italy and Japan BITs expressly protect against not only direct but indirect expropriation, and all Peru’s FTAs do likewise. Furthermore, the Canada, Costa Rica, Guatemala, Panama, Singapore, South Korea and United States FTAs provide annexes giving further detail on what constitutes indirect expropriation. However, the BITs for Denmark and Germany for example are silent as to indirect expropriation.

Limited right to arbitration

In keeping with most BITs it signed before 2000, China’s BIT restricts ICSID’s jurisdiction to disputes involving the amount of compensation for expropriation.

Expropriation in accordance with the ‘due process of law’

The majority of Peru’s investment treaties provide that expropriation of an investment must occur under ‘due process of law’ (eg, the Japan BIT and the Canada FTA). However, the China FTA and the Mexico FTA, as well as the Italy BIT, use different wording respectively. The China FTA, for instance, provides for expropriation ‘under domestic legal procedure’, while the Italy BIT provides for expropriation in line with ‘all legal provisions and procedures’.

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

Peru

Issue

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

Common exceptions to MFN treatment

The majority of Peru’s investment treaties provide that ‘most favoured nation’ and/or ‘national’ treatment of an investment does not extend to benefits of membership of a customs or monetary union or free trade area, or to taxation agreements/legislation. The Canada and Japan BITs and the Costa Rica, Guatemala, Panama, Pacific Alliance, Honduras FTAs and Trans-Pacific Partnership Agreement expressly exclude the obligation to grant MFN treatment procedures for dispute resolution as set out in the respective treaties. The China FTA provides that treatment to socially or economically disadvantaged minorities or ethnic groups or cultural industries are exempt from the MFN treatment, while the US FTA contains at Annex I various exceptions to MFN treatment. The Chile, China, Malaysia, Norway, Paraguay, Romania, Span, Switzerland and Thailand BITs word MFN treatment as applying to the ‘fair and equitable treatment’ on investments, rather than to investments themselves. MFN treatment in the Dutch BIT is expressed as applying to ‘full security and protection’ on investments.

Scope of MFN treatment

All of Peru’s FTAs apply MFN treatment both to ‘investors’ and ‘investments of investors’, but also express more specifically that these protections apply to establishment, acquisition, expansion, management, conduct, operation and sale or other disposition of investments. The BITs for BLEU, Canada, Czech Republic, Finland, the Netherlands, Romania, Spain, Sweden and the UK contain similarly specific wording.

MFN treatment only

Certain BITs such as the China and Malaysia BITs omit national treatment provisions. However, as they guarantee most favoured nation treatment to Contracting Parties, to the extent that other BITs signed with those States contain national treatment provisions they are arguably available to Peruvian investors.

Limitation on national treatment

Most of Peru’s FTAs apply national treatment both to ‘investors’ and ‘investments of investors’, but also express more specifically that protections apply to management, conduct, operation and sale or other disposition of investments. The FTAs for China and the US make respective exceptions for treatment to socially or economically disadvantaged minorities or ethnic groups and industries set out in Annex I. Most Peruvian BITs make exception to their national treatment obligations for benefits of membership of a customs or monetary union or free trade area, or to taxation agreements/legislation. The Chile, China and Malaysia BITs do not contain such exceptions.

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

Peru

Issue

Distinguishing features of the ‘protection and security’ standard

Scope

There are varying formulations to the standard of ‘protection and security’ to investors and investments provided for in Peru’s investment treaties. All of Peru’s FTAs provide for ‘full protection and security’, as do most of Peru’s BITs aside from the Chile, China, Paraguay, Portugal, Spain and Switzerland BITs which only guarantee ‘protection’ or to ‘protect’. The Italy and Romania BITs do not appear to contain a ‘protection and security’ clause with that specific wording.24 The BLEU and Bolivia BITs use the term ‘continuous protection and security’ and the Thailand BIT promises ‘most constant protection and security’. The BLEU BIT however makes exception for ‘measures required to maintain public order’.

Customary international law on protection and security

Ten of Peru’s investment treaties equate ‘full protection and security’ with the concept of full protection and security under customary international law. These are the Canada, Chile, China, Costa Rica, Guatemala, Mexico, Panama, Singapore, Honduras, Pacific Alliance, South Korea and United States FTAs and the Trans-Pacific Partnership Agreement. The Chile, Costa Rica, Guatemala, Panama, Singapore, South Korea and the United States FTAs go further and specify that this includes ‘measures as may be reasonably necessary to ensure the physical protection and security of the covered investment’.

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

Peru

Issue

Distinguishing features of any ‘umbrella clause’

Scope

8 of Peru’s BITs (Denmark, Netherlands, Switzerland, Paraguay, Portugal, Thailand, United Kingdom and Venezuela) contain umbrella clauses binding in varying degrees the Contracting States to obligations entered into with regard to investments with nationals and/or companies of the other Contracting State. The language used in these provisions varies, from ‘observe any obligation’ (in the Denmark, Netherlands, Thailand, UK and Venezuela BITs), ‘respect their obligations’ (Paraguay BIT) to the much more encompassing ‘constantly guarantee the observance of commitments’ (in the Switzerland BIT).

Qualification of the obligation

All umbrella clauses included in Peru’s investment treaties are not qualified and apply to obligations or commitments entered into between the Contracting State and the investor (or ‘national’ or ‘company’ as the applicable term may be).

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

Peru

Issue

Other substantive protections

Free transfer of
payments

All of Peru’s investment treaties guarantee free transfer or repatriation of payments. All of Peru’s FTA’s and the BLEU, Canada, Cuba, El Salvador and Japan BITs qualify this free transfer however. These treaties exclude, among others, equitable and non-discriminatory application of laws for bankruptcy, insolvency or the protection of the rights of creditors, issuing, trading or dealing in securities and criminal or administrative offences from their free transfer obligations. The Denmark and Spain BITs are more prescriptive as to the timeframe for transfer or repatriation of capital, with Denmark specifying that ‘without delay’ has a cap of three months and Spain specifying that ‘without excessive delay’ has a cap of two months.

Non-impairment

All of Peru’s FTAs do not have an express clause protecting against ‘impairment’ of investments, but this is arguably implied in their prescriptive and detailed ‘fair and equitable treatment’ clauses. Most of Peru’s BITs contain clauses protecting against impairment of investments, which further specify that this extends to the ‘management, maintenance, use, enjoyment or disposal of investments’. The BITs for Canada, China, Czech Republic, Norway, Portugal, Romania and Thailand do not contain such provisions but, as above, these may nonetheless be implied in their fair and equitable treatment clauses. The BLEU, Bolivia, Ecuador, Italy, Switzerland and Venezuela BITs phrase the clauses such that Contracting Parties shall not impair investments through ‘arbitrary or discriminatory’ (or similarly worded as it may be) measures, which may indicate a more restrictive application of the non-impairment obligation. The France and Japan BITs phrase their protections generally, with Japan’s BIT preventing Contracting Parties from prescribing special formalities which ‘impair the substance of the rights…under this Agreement’.

Armed conflict/civil unrest

All Peru’s investment treaties contain clauses which guarantee investors of Contracting Parties compensation for losses on investments in the case of armed conflict or civil unrest. The China and Mexico FTAs explicitly state this compensation is subject to most favoured nation status, such that compensation granted cannot be less favourable than that given to a third State investor, while the rest of Peru’s FTAs set out that this is subject to ‘non-discriminatory’ treatment. The BITs for Cuba, Ecuador, Germany and Venezuela only ensure treatment no less favourable than that given to local nationals/companies with respect to restitution, compensation etc., excluding MFN applicability. The BIT for Czech Republic provides greater specificity as to the scope of the obligation, setting out that losses caused by a Contracting Party requisitioning property unnecessarily or destroying property outside of combat action will give rise to compensation liability during the period of requisition or destruction.

Procedural rights in this country’s investment treaties

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

Peru

Issue

Procedural rights

Fork-in-the-road

Sixteen of Peru’s BITs contain fork-in-the-road clauses. Out of these, however, six (the Italy, Japan, Paraguay, Portugal, Romania and Spain BITs), while providing for choice between local courts and international arbitration, do not contain an explicit stipulation that such choice will be final and binding. All of Peru’s FTAs do not contain fork-in-the-road clauses and only allow for international arbitration (offering ICSID or ad hoc arbitration in the alternative).

Waiver of local remedies

Most of Peru’s investment treaties do not require investors to provide additional waivers of its right to pursue any cause of action arising from the same circumstances in the Contracting Party’s courts. The BLEU, Bolivia and Canada BITs do require such waiver, as do the Mexico, Panama, Singapore , Pacific Alliance, Honduras and South Korea FTAs and the Trans-Pacific Partnership Agreement.

Exhaustion of local remedies

The majority of Peru’s investment treaties do not contain provisions which oblige an investor to exhaust local judicial processes and/or courts before submitting a claim for international arbitration. The Germany and Switzerland BITs contain such a provisions which provide that the case may be escalated to international arbitration if the local remedy does not produce a decision on the merits for eighteen months or controversy persists following that decision. The Germany BIT further allows for both parties to mutually agree to such further escalation. The Sweden BIT gives parties the option, in lieu of amicable settlement, to pursue ‘local resources’ for three months after the legal dispute arises, following which if no final judgment is handed down international arbitration can be pursued.

ICSID or ad-hoc arbitration

Most of Peru’s investment treaties provide a right of recourse to ICSID or ad hoc arbitration. The Australia, Chile, Ecuador, Finland, France, Malaysia, Netherlands, Sweden, Thailand, United Kingdom and Venezuelan BITs provide only for ICSID arbitration, while the Cuba BIT only provides for ad hoc arbitration.

Time limits

Most of Peru’s FTAs require that a claim be commenced within three years of the investor having first acquired knowledge of the facts giving rise to the alleged breach, while the Canada FTA stipulates 39 months and the Trans-Pacific Partnership Agreement stipulates three years and six months. The BLEU, Canada and Japan BITs also have such a time limit.

General limitations

Under the BLEU BIT, the tribunal can only award separately or in combination monetary damages and interest. In cases of restitution of property, it shall be paid monetarily and with interest in lieu of restitution.

Applicable law

Peruvian BITs which provide a right to refer a dispute to ICSID generally are generally silent as to what law or laws are to govern the parties’ dispute (with the exception of the Argentina, Canada, China, Germany, Japan, Romania, Spain and Switzerland BITs which provide inter alia that the tribunal shall decide the dispute in accordance with the treaty and the applicable rules and principles of international law). All of Peru’s FTAs contain clauses giving guidance as to the governing law to be applied in arbitral proceedings, aside from the China, Singapore and South Korea FTAs. In circumstances where this is not explicated in the investment treaty, the applicable law is likely to be determined in accordance with Article 42 of the ICSID Convention, which provides that in the absence of an agreement between the parties, the tribunal shall apply the law of the Contracting State party to the dispute (including its rules on the conflict of laws) and such rules of international law as may be applicable.

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

Peru

N/A

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?

Peru

Government entity to which claim notices are sent

Most of Peru’s investment treaties are silent as to the governmental entity to which notices are to be addressed, but where stated (eg, in the FTAs for China, Costa Rica, Guatemala and Panama) the entity is consistently:

Directorate General of International Economic Affairs, Competition and Private Investment

Ministry of Economy and Finance

Jiron Lampa #277 Floor 5

Lima 1, Peru

Additionally, article 6 of Law No 28933 establishes that any public entity which is formally notified by an investor that it will submit a dispute under an investment treaty or contract should notify the Ministry of Economy and Finance.

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

Peru

Government department which manages investment treaty arbitrations

Peru’s Coordination and Response System for International Investment Disputes was created in 2006 by Law No 28933, it is coordinated by the Ministry of Economy and Finance and also contained a Special Commission which is responsible for inter alia assessing the possibility of reaching a settlement in the direct negotiation stage and participating in these negotiations, proposing the hiring of legal counsel and other professionals required; appointing arbitrators; facilitating the work of the outside counsel retained for the defence of the State; approving the availability of funds required for its participation in the corresponding negotiations and determining the responsibility of the public entities involved in the dispute.

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?

Peru

Internal/external counsel

While there are no restrictions or preconditions under Peruvian law on the nationality of persons entitled to appear as counsel or arbitrators, little has been published by the abovementioned Coordination and Response System for International Investment Disputes about the procurement process for hiring counsel.

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.

Peru

Washington Convention implementing legislation

Yes. All arbitrations (domestic or international) are governed by the General Arbitration Act – Law No 26572 of 1996 and the Arbitration Act Legislative Decree 1071 of 2008, which is based on the UNCITRAL Model Law. It provides that foreign arbitral awards shall be recognized and enforced in accordance with: (1) the New York Convention, enacted by Peru in 1988; (2) the Inter-American Convention on International Commercial Arbitration (the Panama Convention), enacted by Peru in 1989; and (3) any other convention on recognition and enforcement of arbitral awards to which Peru is a party.

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.

Peru

New York Convention implementing legislation

General Arbitration Act

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

Peru

Legislation governing non-ICSID arbitrations

General Arbitration Act

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?

Peru

Compliance with adverse awards

There are no recorded instances of Peru refusing to comply with adverse investment treaty awards. Complementary Provision (No. 14) contained in the Arbitration Law, Decreto Legislativo No. 1071 of 2008 expressly provides that the enforcement of awards rendered in investment treaty arbitrations administered by the International Centre for Settlement of Investment Disputes (ICSID’) shall be in accordance with the 1965 ICSID Convention. However, repayment of awards by government entities can be quite slow since, under Article 47 of the Decreto Supremo Nº 013-2008-JUS, governmental entities are prevented from paying more than 3% of their budget each year to satisfy judgments.

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

Peru

Attitude of government towards investment treaty arbitration

The government of Peru has a positive attitude towards investment treaty arbitration. It authorised but also promotes investment arbitration. This is evident from the number of treaties it has entered into (ICSID, MIGA, OPIC, New York Convention and Panama Convention) and from Peru’s Coordination and Response System for International Investment Disputes.

The fact that a large number of arbitral awards have been decided in favour of the Peruvian state, including the latest jurisdictional victory for Peru in Renee Rose Levy and Gremcitel SA v Peru , has also contributed to this attitude.

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

Peru

Attitude of local courts towards investment treaty arbitration

There are no recorded cases of local courts intervening or otherwise interfering with ICSID proceedings or declining to enforce them. Peru provides a favourable framework leading to the enforcement of foreign awards and specifically investment arbitration awards.

The Fourth Supplementary Provision of the Arbitration Act provides that to enforce an award issued by an ICSID arbitral tribunal, the rules governing the procedure for the enforcement of awards issued by international tribunals shall apply, as a binding decision rendered by a court in any State, under the rules of the Convention on the Settlement of Investment Disputes between States and nationals of other countries. As provided in Section 6 of the ICSID Convention, specifically, Articles 54 and 55, the ICSID award should be recognised without any review on the appropriate form or on its merits. So its enforcement should proceed as a final decision of a Peruvian court.

Even though Peru has not expressly chosen the competent courts to recognise and enforce ICSID awards, the provisions of Law 27775 which regulate the procedure for the enforcement of judgments issued by supranational courts, shall apply for this purpose. According to Article 2 of Law 27775 and understanding that the ICSID arbitral tribunal has been constituted under an international treaty ratified by Peru, it is understood that the award of the international tribunal shall be transcribed by the Ministry of Foreign Affairs.

National legislation protecting inward investments

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

Peru

National legislation

Substantive protections

Procedural rights

FET

Expropriation

Other

Local courts

Arbitration

Legislative Decree N° 662, approving the Legal Stability Regime for Foreign Investments, the Legislative Decree N° 757, approving the Framework Law for the Development of Private Investments, and the Supreme Decree N° 162-92-EF, approving the Regulations to Private Investment Guarantee Regimes

Yes

Yes

Non-discrimination and national treatment

Yes

Yes

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?

Peru

Relevant guarantee scheme

Qualifying criteria, substantive protections provided and practical considerations

N/A

None identifiable

Awards

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

Peru

Awards

Republic of Peru v Caravelí Cotaruse Transmisora de Energía S.A.C . ARB/13/24

Isolux Corsán Concesiones S.A. v Republic of Peru ARB/12/5

Renée Rose Levy and Gremcitel S.A. v Republic of Peru ARB/11/17

Caravelí Cotaruse Transmisora de Energía S.A.C. v Republic of Peru ARB/11/9

Renée Rose Levy de Levi v Republic of Peru ARB/10/17

Convial Callao S.A. and CCI - Compañía de Concesiones de Infraestructura S.A. v Republic of Peru ARB/10/2

Aguaytia Energy, LLC v Republic of Peru ARB/06/13

Duke Energy International Peru Investments No. 1 Ltd. V Republic of Peru ARB/03/28

Industria Nacional de Alimentos, S.A. and Indalsa Perú, S.A. (formerly Empresas Lucchetti, S.A. and Lucchetti Perú, S.A.) v Republic of Peru ARB/03/4

Compagnie Minière Internationale Or S.A. v Republic of Peru ARB/98/6

Pending proceedings

Bear Creek Mining Corporation v Republic of Peru ARB/14/21

Pluspetrol Perú Corporation and others v Perupetro S.A. ARB/12/28

DP World Callao S.R.L., P&O Dover (Holding) Limited, and The Peninsular and Oriental Steam Navigation Company v Republic of Peru ARB/11/21

The Renco Group, Inc. v Republic of Peru UNCT/13/1

Tza Yap Shum v Republic of Peru ARB/07/6

Reading List

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

Peru

F. Cantaurias Salaverry, Commercial Arbitration and Investment (Lima, UPC, 2008)

C. Soto and A. Bullard (ed.), Comments on the Peruvian Law of Arbitration . (Lima, Instituto Peruano de Arbitraje, 2011).

A. Bullard, International Bar Association Arbitration Guide – Peru (IBA Arbitration Committee, 2012)

Notes

1 18 of Peru’s 33 BITs and 7 of its 16 FTAs do not have official English language versions. Where this has been the case, we have relied on unofficial English-language translations and stress the need for localised advice where any BIT/FTA is concerned.

2 ‘continuous protection and security’ guaranteed.

3 continuous protection and security’ guaranteed.

4 Subject to exceptions under Annex III including the establishment, strengthening and expanding of free trade areas and custom unions and foreign aid programmes.

5 Waiver to local courts needed as precondition to arbitration

6 ‘protect’ only.

7 Only ‘protection’ guaranteed

8 ‘protect’ only.

9 Superseded by the Peru-South Korea FTA (as per Article 9.17 of the FTA).

10 Only ‘protection’ guaranteed.

11 ‘protect’ only.

12 ‘protect’ only.

13 Superseded by the Peru-Singapore FTA (as per Article 10.20 of the FTA).

14 Only ‘protection’ guaranteed.

15 ‘protect’ only.

16 Only ‘protection’ guaranteed.

17 ‘most constant protection and security’ guaranteed.

18 Article 5.7 Relation to Other International Agreements states the FTA. is ‘without prejudice to…other international investment agreements, to which Peru and an EFTA State are parties’ and thus refers to the BITs between Peru and Iceland, Norway and Switzerland for bilateral investments between the respective States.

19 Footnote 22 of Article 111 makes clear that investment protection, including investor-State dispute resolution, is not within the scope of the FTA.

20 Article 30 of the FTA states aspiraitonally that Signatory Parties will examine the possibility of signing new investment agreements, but that existing bilateral agreements between MERCUSOR parties and Peru shall remain in full force.

21 Article 4 Investment of the ‘Framework Agreement on Closer Economic Partnership’ of the Peru-Thailand FTA states that it ‘shall be construed in accordance between’ the Peru-Thailand BIT.

22 ‘most constant protection and security’ guaranteed.

23 In order to be consistent with the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights.

24 As in Footnote 1 above these are based on unofficial translations of non-English language treaties

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