BUENOS AIRES – Argentine Economy Minister Axel Kicillof said on Friday that an international arbitration ruling ordering Argentina to pay $405 million in compensation to French utility Suez was in fact a “defeat” for the company, though he added that Buenos Aires would still appeal the decision.
The ruling by the Washington-based International Center for Settlement of Investment Disputes, a member of the World Bank Group, is adverse for Suez because the arbitral award fell far short of the $1.2 billion the company was demanding, Kicillof said in a press conference.
Suez had been seeking that amount for moral damages, as well as compensation for the termination of its contract and for the money the company invested in the South American country, Kicillof said.
But the ICSID only recognized the company’s claim pertaining to its investments in Argentina, an amount of $400 million, the minister said.
“The ICSID did not recognize the moral damage, it didn’t recognize compensation (for breach of contract), it just recognized the investment. It’s an adverse ruling for the company. It’s a defeat. They only recognized one-third of what (Suez was) claiming,” he added.
The ruling is not final and Argentina will appeal it to challenge the investment reimbursement decision, according to Kicillof, who said the amount Suez invested was “a pittance.”
“The ruling, as it stands, proves us right. That company had to go. Its contract needed to be terminated. That’s why (the arbitration body) recognized one-third, which we’re now going to discuss,” Kicillof said.
Aguas Argentinas, a unit of Suez, was awarded a concession in 1993 to provide potable water and drainage services in Buenos Aires, but the Argentine government canceled that contract unilaterally in 2006, according to the French utility.