December 17, 2017
Friday, July 28, 2017

Tribunal fines Argentina US$320M over Aerolíneas Argentinas expropriation

Payout represents 20 percent of that sought by now insolvent Marsans Group

Argentina has been ordered to pay more than US$320 million to the insolvent Marsans Group over the expropriation of Aerolíneas Argentinas and other companies, closing a chapter in a saga that started in 2008.

In a split decision, a tribunal at the World Bank’s International Centre For Settlement Of Investment Disputes (ICSID) ruled that Argentina had breached the terms of a bilateral investment treaty the country held with Spain, specifically unlawfully expropriating Aerolíneas Argentinas and associated companies such as Optar, Jet Paq, Austral among others. The ICSID fined the state US$320.76 million and US$3.49 million in legal fees. Interest, dated back to December 2008, adds another US$23.76 million to the total payout settled by the ICSID tribunal. As such, the tribunal awarded about 20 percent of the US$1.59 billion the investors had claimed in the case.

The majority was signed off on by Thomas Buergenthal, a US citizen and former judge at the International Court of Justice and Inter-American Court of Human Rights and president of the tribunal handling the case and Canadian arbitrator Henri Alvarez QC, who was appointed by the claimants. The arbitrator appointed by Argentina, Dr. Kamal Hossain, wrote a dissenting opinion that rejected the fundamental findings of the majority.

Following the tribunal’s decision, Burford Capital Limited — a finance and investment firm — celebrated that it stood to earn “in the range ofUS$140 million” and is subject to an ongoing and compounding interest entitlement. Burford had financed the litigation for the claimant to the tune of US$13 million, and while the firm is not yet guaranteed the US$140 million, as it is subject to appeal, it nonetheless stands to make a handsome return. The previous government accused Burford of buying up the claim and its lawyers brought up the issue in the tribunal’s proceedings, saying that it would be the primary beneficiary of any ICSID award.

The tribunal did not accept those arguments.

“We are very pleased with this result and are gratified to see justice done for Teinver and its stakeholders. Without Burford’s capital, it is doubtful that this kind of recovery could have been obtained for the claimants,” said Christopher Bogart, Chief Executive Officer of Burford.

Marsans was declared insolvent in 2010 and one of its former owners, Gerardo Díaz Ferrán, has been convicted on fraud charges in Spain.

Aerolíneas Argentinas was expropriated in 2008 during former president Cristina Fernández de Kirchner’s first term with a law that was approved by Congress. Citing debts accrued by the Marsans Group in its operation of Aerolíneas, compensation of one peso was paid to the former controllers of the airline. Marsans rejected the terms of compensation. Mauricio Macri’s PRO voted against the expropriation and he was himself critical of the move in 2008. In response to the award, Macri called it a result of the “clumsiness” of the Kirchnerite government and how it handled the matter.

Aerolíneas Argentinas has been under state control since 2008 and is currently under the stewardship of its second president in the Macri era. Mario Dell’Acqua replaced Isela Costantini as president at the end of 2016, and in January this year Siro Astolfi, formerly a member of one of the law firms that helped Marsans file the complaint, has been named vice-president of the airline’s board._

— Herald staff

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