ICSID ends Entel arbitration process

5 Nov 2009

The World Bank’s arbitration body, the International Centre for the Settlement of Investment Disputes (ICSID), has reportedly called a halt to the arbitration process between the Bolivian government and Euro Telecom International (ETI), a subsidiary of Telecom Italia (TI) related to the renationalisation of Empresa Nacional de Telecomunicaciones (Entel), BNamericas reports. Citing local press, the reports indicates that the ICSID has accepted the Bolivian state’s argument that it does not recognise it as a valid organisation; in July 2008 after ETI turned to the World Bank body, Bolivian authorities refused to acknowledge the arbitrator’s authority in the matter, claiming that the ICSID had no jurisdiction in the case since the suit was filed after Bolivia had decided to withdraw from the arbitration tribunal in May 2007. One Bolivian daily has claimed now that if ETI wishes to continue the arbitration process it will be forced to find another court to take the matter on.

According to TeleGeography’s GlobalComms Database, the issue has arisen after a presidential decree was issued in April 2007 setting a 30-day deadline for the Italian firm to negotiate Entel’s return to state hands. A month later the government stepped up the pressure on TI to divest its interest, claiming that Entel owed the state USD53.4 million in unpaid taxes, and approximately USD7 million in fines. Following a stalemate lasting several months, President Morales issued a Supreme Decree in May 2008 ordering the renationalisation of the operator and under the terms of the renationalisation TI was offered USD100 million for its stake, a figure which the Italians claimed was well below the market value of the telco.