Colombia should pay greater than 500 million euros to Telefónica after the worldwide arbitration resolution | Economy | EUROtoday

The Colombian State has misplaced the worldwide litigation towards the Spanish multinational Telefónica earlier than the International Center for Settlement of Investment Disputes (ICSID), sources aware of the method knowledgeable EL PAÍS/Cinco Días. The Committee’s resolution for this of this worldwide arbitration physique obliges Colombia to instantly pay compensation that, including the principal capital, the authorized curiosity accrued and the prices of the method, exceeds 500 million euros, as already acknowledged within the first ICSID award of 2024, towards which the Colombian Government filed an attraction for annulment.

The ruling confirms the duty to return the 379.8 million {dollars} (357.6 million euros) that Telefónica disbursed in 2017 after an opposed nationwide ruling. To this determine is added an annual curiosity of 5% calculated from 2018 till the efficient date of fee (round 153 million euros), along with the authorized bills derived from eight years of worldwide arbitration. The courtroom decided that Colombia didn’t adjust to its obligation to grant “fair and equitable treatment” to the investments of the Spanish group, violating the Agreement for the Promotion and Reciprocal Protection of Investments signed between Colombia and Spain in 2005.

This newest decision has been rushed after a technical failure by the National Agency for Legal Defense of the State (ANDJE) of Colombia. The Committee for this of the ICSID – an impartial and non permanent physique totally different from the courtroom that issued the preliminary ruling – has now rejected the request for suspension introduced by the Colombian Government upon verifying that the nation didn’t current a financial institution assure for the entire worth of the sentence over the last 30 days of the method. This assure was the important requirement to take care of the provisional suspension of assortment. Without this monetary assist, the courtroom licensed the corporate to execute the decision.

According to sources near the method, Colombia couldn’t do it as a result of the 2026 funds was already dedicated and there was no availability to represent that assure. Now, the Petro Government can solely hope that the annulment attraction it filed towards the choice adopted by the ICSID two years in the past is profitable, however the identical sources point out that it is vitally unlikely that this may occur in accordance with earlier jurisprudence in one of these litigation. On June 3 and 4, 2026, the listening to on the annulment request will happen in Paris, the place the advert hoc Committee will hear the events and make the ultimate arguments.

The Colombian Government introduced this Wednesday that it’ll exhaust all accessible sources earlier than worldwide courts to defend the pursuits of the State within the litigation. “The ANDJE confirms that it will continue to firmly defend the interests of the Nation and that it will exhaust all available legal resources to suspend the execution of the award,” this group mentioned in an announcement.

The ADNJE recalled that the award that condemned Colombia to pay the million-dollar sum was notified to the events on November 12, 2024, “after an excessive period of three years of deliberations” and some days later that entity “requested its annulment and the suspension of its execution until a final decision is made.”

Last February, Telefónica accomplished the sale of its 67.5% stake in Colombia Telecomunicaciones (ColTel) in favor of Millicom, for 214 million {dollars} (182 million euros). However, the lawsuit with the Colombian State was ignored of the pact, so it will likely be the corporate chaired by Marc Murtra that may obtain the fee. Telefónica has declined to touch upon the ICSID ruling when requested by this newspaper.

Origin of the battle

The origin of the authorized battle dates again to the cell mobile phone concession contracts signed in 1994. These paperwork included clause 33, which established the “reversion of assets”, a rule that obliged operators to ship to the nation all of the infrastructure (antennas, networks and base stations) on the finish of the contract. Although legal guidelines from 1998 and 2009 eradicated this obligation to encourage funding in new applied sciences, the Comptroller General of the Republic dominated in 2013 that the unique clauses needed to be revered above subsequent legal guidelines, because the contracts had been signed beforehand.

In July 2017, a nationwide arbitration courtroom primarily based in Bogotá ordered the operators ColTel (a subsidiary of Telefónica) and Claro (owned by América Móvil) to pay millionaire sums for these belongings. ColTel, then owned 67.5% by Telefónica and 32.5% by the Colombian State, was ordered to pay 1,652 million Colombian pesos, about 530 million {dollars} on the time. The Spanish multinational needed to perform a capital enhance in its subsidiary to cowl the roughly 270 million euros on the time akin to its participation.

Telefónica initiated worldwide arbitration earlier than the ICSID in February 2018, alleging that the Colombian State arbitrarily modified the foundations of the sport and violated authorized certainty. The panel initially dominated in favor of the corporate on the finish of 2024. The courtroom thought of that, though the State has regulatory energy, the retroactive software of the asset reversion constituted a disproportionate measure that affected the worth of the international funding.

The distinction in outcomes between international operators in Colombia lies within the energy of worldwide treaties. In 2021, the ICSID dominated in favor of Colombia in an identical case initiated by Claro, stopping the State from returning 1,286 million {dollars} (1,209 million euros). The courtroom decided on that event that the free commerce settlement with Mexico offered fewer ensures than the bilateral settlement signed with Spain, which offered extra strong safety to Telefónica towards unexpected regulatory modifications.

Petro Rebellion

The fiscal impression of this resolution happens at a time of rigidity between the Executive and the worldwide arbitration methods. The Colombian president, Gustavo Petro, has formally proposed Colombia’s departure from the ICSID, describing these courts as organizations that “injure national sovereignty.” According to estimates by the Presidency, the nation at the moment faces authorized dangers value 52 billion Colombian pesos (11.37 billion euros) in varied worldwide processes. However, authorized consultants level out {that a} unilateral exit wouldn’t nullify ongoing processes or current treaty commitments, which usually embody safety clauses prolonged for a number of months after notification of withdrawal.

Colombia’s authorized defeat earlier than the ICSID units a precedent for the interpretation of reversion clauses in infrastructure contracts. The resolution emphasizes that compliance with nationwide rules doesn’t exempt the State from its worldwide obligations beneath funding safety treaties.