Telefónica has informed the National Securities Market Commission (CNMV) that it has obtained “a favorable ruling for the company regarding the investment dispute submitted to the International Center for Settlement of Investment Disputes (ICSID) against the Republic of Colombia, established under the Agreement between the Republic of Colombia and the Kingdom of Spain for the Promotion and Reciprocal Protection of Investments (the APPRI).”
The Court has considered that Colombia failed to comply with its obligation to grant fair and equitable treatment to Telefónica’s investments in accordance with Article 2 of the APPRI, and has ordered it to pay the amount of 379.8 million dollars (approximately 357.6 million euros at the current exchange rate) further interest compounded at a rate of 5% as compensation for the damages caused, that is, the entire principal amount and interest claimed by the company.
Furthermore, the Court has condemned Colombia to pay the fees of the lawyers used by Telefónica during the arbitration procedure, along with the corresponding interests.
Background
On February 2, 2018, Telefónica initiated an international arbitration procedure against Colombia before the ICSID. In said arbitration, Telefónica claimed damages caused by a series of State measures that affected Telefónica’s investments in its affiliated company Colombia Telecomunicaciones, in which Telefónica has a majority stake.
The dispute arose from the application by the State of various measures to obtain the reversion of assets related to Telefónica’s telecommunications business in Colombia. As a consequence of these measures, Telefónica was forced to pay the State the amount of 379.8 million dollars in 2017. Telefónica argued that the measures that led to said payment, including by the Colombian Constitutional Court and other entities, were implemented in violation of APPRI.
To resolve the dispute, an international arbitration tribunal consisting of a three-member panel was constituted.