By JIGGSLAW®. The Salvadoran government has communicated under the heading “Legal Actions in Favour of the State” an increase in its arbitration proceeding departmental budget. An International Center for Settlement of Investment Disputes (ICSID) request for arbitration, filed by HSBC Latin America Holding (UK), was notified to El Salvador in September 2021.

The departmental budget amounts to $3,065,005 and, presumably, is to be used to cover the legal costs of El Salvador in the ICSID investment arbitration.

HSBC Latin America Holdings was ordered to pay $49.3 million when it lost the proceeding in 2019 against José Salverría. HSBC argues that the conduct of the Salvadoran courts resulted in its facing a claim of almost $50 million. The denial of justice and unfair treatment in this matter by certain Salvadoran courts, including its top judicial authority, is also denounced. According to HSBC’s notice of arbitration, the breach of these international obligations means El Salvador must repay HLAH with public funding for losses caused by its conduct.

HSBC is represented by Linklaters (London and Washington) and Novis Estudio Legal (San Salvador). The Republic of El Salvador Prosecution Service is represented by Laborde Law (France) and Barnetche, Aguilar y Camarena (México) firms.

The latest news related to this arbitration:

The parties have already nominated co-arbitrators: the Chilean Andrés Jana Linetzky (HSBC) and the French Thomas Clay (El Salvador).

This investment arbitration proceeding is the fifth for El Salvador at ICSID. Prior arbitrations were:

  • Enel Green Power (an Italian corporation) v. El Salvador: parties reached an agreement in 2015 that included the end of business operations and the selling of its shares in the LaGeo geothermic central for $280;
  • Commerce Group Corp. And San Sebastian Gold Mines (both U.S. corporations) v El Salvador: a claim was dismissed, in 2013, for not falling within the Central America Free Trade Agreement (CAFTA) scope and jurisdiction;
  • Pacific Rim Cayman v El Salvador: The American corporation lost the mine in 2016. It claimed mining rights over the El Dorado mine. El Salvador saved it to protect the communities’ rights over the waters; and
  • Inceysa Vallisoletana V El Salvador: the Spanish corporation claimed $122 million for the concession of inspection stations for vehicles in 2003; El Salvador won.

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