A. LEGISLATION AND RULES
A.1 Legislation
International arbitration in Colombia continues to be governed by section 3 of Law 1563 of 2012,[1] to which there have been no legislative amendments. Legislative attempts to modify section 3 of Law 1563 have been shelved, and there is no current bill being discussed to amend it.
As informed in previous editions of the International Arbitration Yearbook, there are two bills currently under discussion in the Colombian Congress related to domestic arbitration: Bill No. 8 of 2023, which provides for the use of arbitration in domestic enforcement proceedings, and Bill No. 198 of 2023, related to the possibility of using arbitration as a mechanism to resolve domestic tax disputes. Both bills only refer specifically to domestic arbitration and may have significant consequences if they turn into law. To date, there have not been any relevant updates in relation to these bills.
A.2 Institutions, rules and infrastructure
The arbitration centers of the Bogotá Chamber of Commerce (BCC), the Medellín Chamber of Commerce and the Cali Chamber of Commerce continue to be the top arbitration institutions in Colombia, with the first two being more active in the administration of international arbitration cases.
In October 2024, the arbitration center of the BCC issued Directive 008 of 2024 (“Directive“) in relation to the publication of arbitral awards and decisions of amicable composition panels in the BCC’s digital library. The Directive aims at making awards from arbitrations administered by the arbitration center available to the public, with the following criteria:
- Domestic arbitration awards are public unless the parties agree to confidentiality
- Awards related to public entities or to those discharging administrative functions are not subject to confidentiality
- Amicable composition decisions are confidential unless the parties authorize their publication
- International arbitration awards are also confidential unless the parties authorize their publication
In any case, publishable decisions and awards will have sensitive data anonymized. In November 2024, the BCC issued Directive 012, which outlines the procedures for the appointment of international arbitrators by the Center of Arbitration and Conciliation of the BBC; and Directive 013, which outlines the guidelines for appointing Tribunal Assistants in international arbitration proceedings at the BBC.
B. CASES
In 2024, the Supreme Court of Justice of Colombia (“Supreme Court“) issued several decisions in relation to the recognition of foreign arbitral awards, reinforcing Colombia’s pro-recognition stance towards international arbitration awards. Furthermore, an ICSID tribunal accepted Colombia’s “essential security” defense in an investment arbitration, an almost unprecedented decision in these forums. Finally, various ISDS tribunals have rendered significant decisions on the interpretation of minimum protection standards and expropriation clauses in mining disputes. These tribunals have also assessed orders for compensation for future damages and rendered politically sensitive awards in telecom disputes.
B.1 Recognition of foreign arbitral awards in Colombia
B.1.1. Supreme Court’s decision of 17 April 2024
On 17 April 2024, the Supreme Court recognized a foreign arbitral award issued by the Society of Maritime Arbitrators (SMA), seated in New York, in relation to a dispute initiated on July 2021 by Tricon Dry Chemicals LLC (“Tricon“) and Plásticos Jaguar SAS (“Plásticos Jaguar“) for the delivery of polythene, in a total amount of USD 213,097. In its award, the SMA ordered Plásticos Jaguar to proceed to pay the outstanding amount, default interests and an allowance to cover legal fees.
In June 2022, Tricon filed a recognition request before the Supreme Court to obtain the recognition of the arbitral award. The Supreme Court analyzed whether the dispute was arbitrable under Colombian law and whether the award violated Colombian public policy. The Supreme Court found that the dispute was arbitrable and that the award did not violate Colombian public policy. According to the Supreme Court, the legal institutions of Colombian national private law recognize the principle of pacta sunt servanda (Latin for “agreements are to be kept”, a principle of law that states that parties to a contract must abide by the terms of the agreements they have made), and the need to execute contracts with the seriousness, rectitude and good faith required in an honest market economy. Therefore, the Supreme Court recognized the award.
B.1.2. Supreme Court’s decision of 24 October 2024
On 24 October 2024, the Supreme Court recognized a foreign award issued by an international arbitration tribunal seated in Miami under ICC Rules. The underlying arbitration initiated in 2019 by Luis Marcos Falcón, Victor Alfredo Vargas Irausquin, and José Santiago Sarmiento Varela ( “Claimants“) against TIS Productions SAS (TIS) and RCN Televisión SA (RCN), concerned a controversy related to variable payments. In 2021, the arbitration tribunal dismissed the claims and ordered the Claimants to pay legal fees, including the corresponding default interests, from the date of service of the award until the payment date.
TIS and RCN requested the recognition of the award, and on 19 December 2023, their request was admitted to process. Mr. Falcón and Mr. Vargas Irausquin challenged the recognition of the award, arguing the following:
- The award was ineffective due to exceeding the statutory time limit for the issuance of the decision under Colombian law
- The request had procedural flaws since the award was not legalized (i.e., the document lacked of a certification of the authenticity of the signature of public officials in the exercise of their functions and the capacity in which they have acted), which contradicted Colombian provisions in that regard
- There was a parallel criminal case in Colombia concerning the same facts of the arbitration, which entailed a lack of arbitrability, since criminal cases fall under the exclusive jurisdiction of the Colombian courts.
The Supreme Court rejected all challenges. First, the court noted that the reasons for refusing recognition of a foreign award are exhaustively recognized in the law, and, therefore, the grounds to challenge the recognition of an arbitral award must correspond solely to the grounds established therein. The court underscored the distinct legal framework governing the recognition of international arbitral award, as provided by Law 1563 of 2012 and relevant international treaties, and that governing the exequatur process for foreign judgments. Due to this distinction, the Claimants’ challenges were dismissed, as they relied on rules inapplicable to arbitral awards. Finally, the court held that the existence of a parallel criminal investigation did not prevent the recognition of the arbitral award, highlighting the separate nature of contractual disputes and criminal proceedings.
These decisions reaffirm Colombia’s adherence to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, reinforce the pro-recognition stance towards international awards in Colombia, and clarify the applicable legal framework, distinguishing it from the rules governing the enforcement of foreign judgments.
B.2 State immunity in foreign arbitral awards enforcement
On 20 June 2024, the Supreme Court denied recognition of a foreign award issued by an ICSID arbitration tribunal seated in Paris in relation to the arbitration proceeding initiated by Rusoro Mining Limited (“Rusoro“) against the Bolivarian Republic of Venezuela (“Award“).
The Supreme Court focused on the distinction between immunity from jurisdiction (inmunidad de jurisdicción) and immunity from execution (inmunidad de ejecución) and found that the immunity from execution is a state’s prerogative, that aims at preventing the adoption of coercive measures against agents or property of the receiving state. While the Supreme Court acknowledged that Colombia is part of the ICSID Convention and that said convention generally requires recognition of awards, it emphasized that the convention does not override customary international law of immunity from execution.
In support of this interpretation, the Supreme Court quoted article 55 of the ICSID Convention, which states that “[n]othing in article 54 [related to recognition and enforcement of ICSID awards] shall be construed as derogating from the law in force in any contracting state relating to immunity of that state or of any foreign state from execution“.
This decision is a significant precedent for the recognition of international investment awards against a state other than Colombia. However, it leaves critical questions unresolved which future cases would need to address.
B.3 The “essential security” defense in investment arbitration
On 28 June 2024, an ICSID arbitral tribunal issued its final award in the case of Angel Samuel Seda, JTE International Investments, LLC, Jonathan Michael Foley and others (“Claimants“) v. The Republic of Colombia. The Tribunal, i.e., Klaus Sachs (Germany – Chair), Charles Poncet (Switzerland) and Hugo Perezcano Díaz (Mexico), found that Colombia’s argument of the essential security interest exception under article 22.2 (b) of the United States–Colombia Trade Promotion Agreement (TPA), was justified. Consequently, the Tribunal declared it lacked jurisdiction to hear the dispute and dismissed the claims.
The dispute arose after Mr. Angel Samuel Seda, a US citizen, purchased a large parcel of land in Medellin, intending to develop a luxury real estate project (“Project“). By 2016, the Project had reportedly secured the relevant environmental and construction permits, as well as the investors. However, on 22 July 2016, the Asset Forfeiture Unit of the Colombian Attorney General’s Office (Unidad de Extinción de Dominio de la Fiscalía General de la Nación) seized the property, under grounds of reasonable inferences of the illicit origins of the property. This decision was triggered by a criminal complaint and a subsequent constitutional action filed by the alleged owner of the property, Mr. Iván López Vanegas, who claimed that his son was kidnapped and coerced into transferring ownership of the property to a criminal organization.
The foreign investors argued that they legitimately acquired the property in good faith and requested the lifting of the attachment placed on the premises. However, their requests were denied and the Attorney’s General Office commenced asset forfeiture proceedings before Colombian courts. Until the date on which the award was issued, the asset forfeiture proceedings were still ongoing.
In the ICSID arbitration, Colombia alleged that, in accordance with the TPA, the Tribunal lacked jurisdiction to adjudicate the legality of measures that the state considered necessary for the protection of its own essential security interests. Colombia also argued that what was at stake was its ability to exercise its sovereign criminal power to fight criminal activities pertaining to illegally possessing and transferring a lot acquired by means of money laundering operations. In turn, claimants submitted that the essential security exception was not applicable to the case, as Colombia did not identify the corresponding interest at the time of application of the measures in question.
The Tribunal found that the relevant clause (article 22.2.(b)) of the TPA is self-judging, that is, that under this provision the state has the power to unilaterally determine the scope of “a carveout to its otherwise binding obligations under international law”.[2] For the Tribunal, the ordinary meaning of an Essential Security Exception provision suggests that it is for the state to determine the scope of its “own essential security interests,” although such determination may be restrained by good faith obligations.[3] Therefore, for the Tribunal Colombia invoked the essential security exception provision in line with the requirements of the TPA, and the measures enacted by Colombia against Claimants are outside of the scope of the TPA.
It is the first time in the history of investment arbitration that a tribunal —unanimously and fully— upheld a state’s invocation of its treaty-based essential security interest as a self-judging bar to the tribunal’s jurisdiction.[4]
B.4 Landmark mining arbitration awards
On 15 July 2024, the ICSID Tribunal formed by Juliet Blanch (United Kingdom-Chair), Horacio A. Grigera Narón (Argentina) and Philippe J. Sands (United Kingdom -France), issued an Award on Damages in Eco Oro Minerals Corp. v. The Republic of Colombia (ICSID Case No. ARB/16/41). The Tribunal held that no damages could be awarded to Eco Oro derived from Colombia’s breach of article 805 of the Free Trade Agreement between Canada and the Republic of Colombia (“Colombia-Canda FTA“).
The dispute initiated by Eco Oro concerned the loss of mining rights over the project associated with the Angostura gold and silver deposit located in the Soto Norte region of Santander. Eco Oro claimed that Colombia’s management of the páramo ecosystem in Santurbán, a unique high-altitude ecosystem that can only be found in the Andean region, and one of the most important water sources in Colombia, deprived it of its mining rights under Concession Contract 3452. In its previous Decision on Jurisdiction, Liability and Directions on Quantum dated 9 September 2021, the tribunal found Colombia responsible for breaching article 805 of the FTA because Colombia’s approach to the delimitation of the Santurbán Páramo was one of arbitrary vacillation and inaction, which inflicted damage on Eco Oro. Although Eco Oro was entitled to claim damages for any loss resulting from Colombia’s breach, the tribunal lacked sufficient information to determine the quantum of damages.
When assessing what losses were caused by Colombia’s measures in breach of article 805 of the FTA and their value, the tribunal determined that the only identifiable loss arising out from Colombia’s breach of article 805 was Eco Oro’s inability to apply for an environmental license regarding the remaining part of the original concession. In the absence of any guidance or evidence from Eco Oro as to the value of the opportunity to apply for a license, the tribunal decided to award no damages.
Another remarkable decision under the Colombia-Canada FTA regarding the páramo ecosystems delimitation is the one in Montauk Metals Inc. (formerly known as Galway Gold Inc.) v. The Republic of Colombia (ICSID Case No. ARB/18/13). In this case, the ICSID Tribunal formed by Eduardo Siqueiros (Chair-Mexico), Alfredo Bullard González (Peru), y Brigitte Stern (France) declared that Colombia did not breach its obligations under articles 805 and 811 of the Colombia-Canada FTA.
On 22 December 2009, Galway, through its Colombian branch GRC, and Reina de Oro, a Colombian company, entered into an Option Agreement regarding Concession 14833 owned by Reina de Oro. Concession 14833 granted certain rights for the exploration and mining of the Vetas Gold Project, located within the California-Vetas Mining District, in the Department of Santander. Galway contended that the legislative measures, judicial rulings, and administrative restrictions and actions adopted by Colombia regarding the prohibition of mining actives in p á ramo ecosystems, and the delimitation of the Santurban-Berlín Páramo, amounted to an unlawful expropriation and breached article 805 of the Colombia-Canada FTA by failing to treat Galway in a fair and equitable manner.
The tribunal concluded that Galway never obtained ownership of Concession 14833 but acknowledged that it did hold protected rights under the Option Agreement with Reina de Oro. The value of the Option Agreement laid in the rights acquired under Concession 14833, which permitted continued exploration and exploitation of mining activities with the necessary authorizations. However, the Claimant never secured additional permits, licenses, nor amendments to existing ones for such purposes, as it never became owner of Concession 14833.
Consequently, the tribunal dismissed the indirect expropriation claims and considered that the measures carried out by the state were adopted in good faith, in a nondiscriminatory manner, and pursued a legitimate public welfare objective. Regarding the fair and equitable treatment standard, the tribunal pointed that, although there were inconsistent actions among the legislature, the executive, and the judiciary, such conduct did not amount to a breach of article 805 of the Colombia-Canada FTA.
On 28 February 2024, the ICSID Tribunal composed of Andrés Rigo Sureda (Spain-Chair), José A. Martinez de la Hoz (Argentina), and Philipe Sands (United Kingdom-France) rendered the final Award in Red Eagle Exploration Limited v. Republic of Colombia (ICSID Case No. ARB/18/12) declaring that Colombia did not breach its obligations under the Colombia-Canada FTA.
The tribunal considered that Colombia’s conduct did not rise to the level required to breach the minimum standard of treatment, as it acted transparently and with a legitimate purpose in the management of páramo ecosystems, nor it amounted to an indirect expropriation of Red Eagle’s investment.
Finally, on 29 October 2024, the tribunal composed of Deva Villanúa (Spain-Chair), Guido Santiago Tawil (Argentina), and Andrés Jana Linetzky (Chile) issued its final Award in South32 SA Investments Limited v. The Republic of Colombia (ICSID Case No. ARB/20/9). The ICSID Tribunal found Colombia responsible for breaching article II.3 of the Bilateral Agreement for the Promotion and Protection of Investments between the United Kingdom and Colombia (“Colombia-United Kingdom BIT“). The tribunal ordered Colombia to pay USD 4,519,417 for damages and to hold South32 harmless from any damage it may suffer in the future due to the enforcement of any of the breaching measures adopted by the state.
The dispute relates to South 32 exploitation of the Cerro Matoso mine in Montelíbano, Colombia, one of the world’s largest open-pit ferronickel mines, producing ferronickel composed of approximately 30% nickel and 70% iron. The regulation regarding the royalties for the operation of the mine contained a formula to calculate the royalties and estimate the value of the extracted mineral. According to this formula, an 8% royalty rate, after deducting certain costs at 80% or 100%, would apply. In 1994, Colombia enacted Law 141 (Royalties Law), which set a minimum nickel royalty rate of 12% and allowed only 75% of costs to be deducted. Although the law was not immediately applicable to existing concessions, Colombia applied it retroactively from 2005, which entailed the recalculation of past royalties. The alleged illegal measures involved certain decisions from the Colombian authorities regarding the recalculation of paid royalties at the higher rate, auditing prior cost deductions calculations, retroactively applying a new pricing mechanism and requiring CMSA to pay royalties on the iron content of the mined ores.
The tribunal acknowledged that some of the measures found to be in breach of the Colombia-United Kingdom BIT, were pending enforcement, so the damages related to those measures had not yet taken place been realized at the time of the Award. Consequently, the tribunal ordered Colombia to hold South32 Investments Limited harmless from all damages that may be suffered because of the enforcement of the breaching measures.
B.4 Recent Telecom decision from ISDS Tribunal
On 12 November 2024, the ICSID Tribunal composed of José Emilio Nunes Pinto (Brazil-Chair), Horacio A. Grigera Naón (Argentina), and Yves Derains (France) issued the Award in Telefónica, SA v. The Republic of Colombia (ICSID Case No. ARB/18/3). The dispute brought by Telefonica under the Agreement between Spain and the Republic of Colombia for the Promotion and Reciprocal Protection of Investments (“Colombia – Spain BIT“) involved the extension by Colombia of the reversion of the radio spectrum to all equipment provided by Telefónica under certain Concession Agreements entered into with the state for the provision of mobile telephone services.
The Tribunal concluded that Colombia breached article 2(3) of the Colombia – Spain BIT by demanding the reversion of all Telefonica’s assets on the eve of the expiration of the Concession Contracts, despite 15 years of a clear understanding that under Laws 422 and 1341 such reversion was exclusively limited to the radio spectrum. The tribunal considered that Colombia’s conduct of depriving Telefónica of the infrastructure necessary to ensure the operation violated the Treaty by failing to guarantee Telefónica and its respective investments the fair and equitable treatment committed by Colombia under article 2(3) of the Colombia – Spain BIT.
On 20 September 2024, the tribunal in Vercara, LLC (formerly Security Services, LLC, formerly Neustar, Inc.) v. Republic of Colombia (ICSID Case No. ARB/20/7) rendered its final Award. Thereby, the ICSID Tribunal, composed of Julian D.M. Lew (United Kingdom-Chair), Kaj I. Hobér (Sweden), and Yves Derains (France), rejected all Vercara’s claims on the merit and declared that Colombia did not breach the Colombia-United States TPA.
Vercara claimed that Colombia breached its fair and equitable treatment and national treatment and most-favored-nation obligations under the Colombia-United States TPA, due to Colombia’s decision not to renew a concession contract for the promotion, administration, technical operation, and maintenance of the .CO internet domain.
However, the Tribunal held that Vercara failed to demonstrate that Colombia’s decision not to negotiate an extension of the concession over the.CO domain violated due process by acting in a manner lacking transparency, and the actions of the Colombian Ministry of Information and Communications Technologies did not amount to a violation of the most favored nation and national treatment provisions in the TPA.
[1] Colombia has a dualist statute that separately regulates domestic arbitration (Section 1) and international arbitral (Section 3).
[2] ICSID Case No. ARB/19/6 between Angel Samuel Seda, JTE International Investments, LLC, Jonathan Michael Foley and others v. The Republic of Colombia, ¶ 638.
[3] Cfr. ICSID Case No. ARB/19/6 between Angel Samuel Seda, JTE International Investments, LLC, Jonathan Michael Foley and others v. The Republic of Colombia, ¶ 650.
[4] See Fisher, Toby. Colombia beats ICSID claim with “essential security” defense. Available at: Colombia beats ICSID claim with “essential security” defence – Global Arbitration Review
