Procedural Posture

This Award resolves a dispute brought by Glencore International A.G. and C.I. Prodeco S.A. (Claimants) against the Republic of Colombia (Respondent) under the Agreement between the Swiss Confederation and the Republic of Colombia on the Promotion and Reciprocal Protection of Investments (BIT). The claims arose from measures taken by Colombia’s Comptroller General (Contraloría) and its mining agency (SGC/ANM) concerning the Eighth Amendment to a long-term mining contract, which Claimants alleged breached Articles 4(1) (unreasonable measures), 4(2) (fair and equitable treatment - FET), and 10(2) (umbrella clause) of the BIT.

Jurisdictional and Admissibility Rulings

The Tribunal addressed four principal objections raised by the Respondent. First, it dismissed the illegality objection, finding that Colombia failed to prove its allegations that the Eighth Amendment was procured through corruption or bad faith. The Tribunal concluded that the evidence did not support the claim of bribery and that Claimants' conduct was a reaction to 'greenmail' by third parties, which they had reported to Colombian authorities. Second, the Tribunal dismissed the fork-in-the-road objection, holding that Prodeco's pre-litigation conciliation request in Colombia did not constitute a submission to a “national tribunal” that would trigger the BIT's fork-in-the-road clause. Third, the Tribunal upheld the objection to its jurisdiction over the umbrella clause claim, finding that Article 11(3) of the BIT expressly excludes disputes regarding Article 10(2) from Colombia's consent to arbitration. Fourth, the Tribunal dismissed the inadmissibility objection, ruling that the claims were ripe for adjudication as the challenged measures (the Contraloría’s final administrative decision and the mining agency's filing of an annulment action) had already been taken.

Findings on the Merits

The Tribunal found that Colombia breached its obligations under Articles 4(1) and 4(2) of the BIT through the conduct of the Contraloría. The central finding was that the Contraloría applied an unreasonable and arbitrary methodology to determine that the Eighth Amendment had caused financial damage to the State. The Tribunal held that the Contraloría’s analysis, which focused exclusively on the one-year “Transition Period,” was fundamentally flawed as it ignored the long-term nature of the contract and the significant additional investments and production expansion that Claimants undertook as the quid pro quo for the revised royalty structure. This conduct frustrated Claimants' legitimate expectations that the fiscal control regime would be applied in a reasonable manner. However, the Tribunal found no breach of the Treaty in relation to the mining agency’s (SGC/ANM) decision to file a Procedure for Contractual Annulment, as this was a right available to it under the contract and Colombian law.

Reparation and Costs

As reparation for the breach, the Tribunal ordered Colombia to provide restitution to C.I. Prodeco S.A. for the Fiscal Liability Amount it had paid, totaling USD 19,100,000. The Tribunal also awarded pre- and post-award interest on this amount at a rate of LIBOR for six-month deposits plus a 2% margin, capitalized semi-annually from the date of payment. The award was to be neutral with regard to Colombian taxes. The Tribunal ordered Colombia to reimburse Claimants for the full costs of the proceedings and USD 1,692,900 in defense expenses, plus interest. All other claims were dismissed.