The long-stalled irrigation dispute over Majes Siguas II has finally resulted in the Arequipa regional government commencing an arbitration proceeding before the Lima Chamber of Commerce at the end of August. Cobra may file a request for arbitration before the International Centre for Settlement of Investment Disputes. Translation provided by JIGGSLAW®.
According to Peruvian media, Arequipa Mayor Rohel Sánchez explained that the decision has been made by the regional government after exhausting the stage of compulsory negotiations which has been rejected by Cobra mid-August (“Gore Arequipa va a arbitraje contra Cobra por Majes Siguas II“, La República, 01.09.2023).
Following Huber Valdivia’s resignation, the announcement of a new Majes Independent Authority (known as Autodem) Chief Executive in July 2022 helped Rohel Sánchez in dealing with the concessionaire situation, as well as with the meetings held with the Peruvian Ministry of Finance to discuss the strategy for a potential international arbitration.
Sánchez explained in declarations obtained by La República that “an international dispute is very likely. As a result, it would be not only an Arequipa regional dispute, but also a Peruvian government dispute, and the strategy to be used needs to be coordinated” (ver “Todo lo que se informe sobre proyecto Majes II será por escrito”, La República, 15.07.2023).
The dispute.
On October 1, 2021, Angostura Siguas concessionaire, which is part of the Cobra Group, informed Peru and the regional government of Arequipa that it would pull out of the Majes-Siguas project related to the regulation and redirection of water resources because it had not received support or guarantees from the Peruvian government for funding; and then the consecutive deadline breaches. Cobra requests the termination of the contract.
On 30 October, the deadline for signing a budget increase addendum to the project agreement to avoid arbitration expired.
However, the company’s deadline was extended. The losses of the Angostura Siguas concessionaire amounted to 67 million in 2020.
