Procedural Background and Parties' Submissions

This decision is issued by an ad hoc Committee constituted under the ICSID Convention to hear an application for annulment filed by the Republic of Colombia against an award rendered in favor of Telefónica S.A. The decision specifically addresses Colombia's request to maintain the provisional stay of enforcement of the award, which was automatically triggered upon the filing of its annulment application.

Colombia, the applicant for annulment, argued for the continuation of the stay without any conditions. It contended that a stay is an essential component of the right to seek annulment and that lifting it would cause significant prejudice, including adverse impacts on its public budget and substantial difficulty in recovering the funds from Telefónica should the award be annulled, particularly given Telefónica's planned divestment of its primary asset in the country. Telefónica, the award creditor, opposed the continuation of the stay, arguing it is an exceptional remedy for which Colombia had failed to demonstrate the requisite circumstances. Alternatively, Telefónica requested that any continuation of the stay be made conditional upon Colombia providing a full financial guarantee, citing a significant risk of non-payment by the State and its own financial solvency, which would ensure repayment if the award were annulled.

The Committee's Analysis and Reasoning

The Committee affirmed its discretionary power under Article 52(5) of the ICSID Convention to decide on the stay. It applied a "balancing of the harms" test, weighing the respective risks and prejudices to each party. The Committee determined that the burden of proof rests on the party seeking to maintain the stay, in this case, Colombia. It found Colombia's arguments regarding public budget constraints to be unpersuasive, reasoning that accepting such an argument would undermine the principle of immediate enforcement of ICSID awards against any State party.

The Committee acknowledged the risk to Telefónica of delayed enforcement and potential difficulties in collection, noting that post-award interest alone would not constitute sufficient compensation for this risk. Critically, the Committee asserted its inherent authority to condition the stay on the provision of a security, concluding that nothing in the ICSID Convention or Rules prohibits such a measure. It reasoned that this power derives from its general authority to conduct the proceedings and resolve ancillary issues. The Committee concluded that granting a conditional stay represented the "least burdensome solution," as it would protect Telefónica from the risk of non-payment while relieving Colombia of the immediate financial consequences of satisfying the award during the annulment proceedings.

Decision

For the foregoing reasons, the ad hoc Committee decided to grant Colombia's request to maintain the stay of enforcement of the Arbitral Award of November 12, 2024, pending the final decision on annulment. However, the stay was made conditional upon Colombia providing an irrevocable bank guarantee in favor of Telefónica. The guarantee is to cover the principal amounts awarded (US$379,804,275.55 and €4,300,824.32) and must be issued by a first-class international bank. The Committee directed Colombia to submit proof of the guarantee's issuance by February 9, 2026. The decision on the costs associated with the stay application was reserved for the final decision on annulment.