Azurix is known in particular for operating in Argentina, where in June 1999 it bid $438m to win a 30-year concession covering two of the three regions of the Buenos Aires Province (excluding the Buenos Aires city concession, which is run by Suez). In October 2001, Azurix announced it would withdraw from the contract as of January 2002, accusing the regional government of "serious breaches", and later filed a compensation claim with the ICSID ("Azurix Corp. v. Argentine Republic (Case No. ARB/01/12)"). The concession was terminated in March 2002; in 2007 the ICSID awarded Azurix $156m in compensation (substantially less than the $620m Azurix originally invested and subsequently claimed in damages). On September 2009, the ICSID Ad Hoc Annulment Committee affirmed the award, rendering the arbitration final[1].
Argentina has not complied with the ICSID ruling and is in violation of US trade law, which states that an arbitration award issued by an ICSID tribunal is “final and binding on the parties, and each party must carry out the provisions of any award without delay (article VII, section 6).” [2].
Azurix maintains a second arbitration case for its prior investment in the Province of Mendoza, Argentina which was suspended as of August 3, 2010[3].
As a result of Argentina’s refusal to pay the Award, in December 2009 Azurix filed a petition with the Office of the United States Trade Representative (USTR) to review Argentina’s eligibility to participate in the US Generalized System of Preferences (GSP) program. In the context of the 2009 review of the GSP program, USTR accepted Azurix’s petition to review whether Argentina met the criteria related to enforcement of arbitral awards. [4]
In August 2010, the Office of the United States Trade Representative (USTR) announced it would hear Azurix’s petition regarding Argentina, in connection with the 2009 GSP Annual Review to modify the GSP status of certain beneficiary developing countries (BDC’s) because of country practices.
In a filing prepared in advance of a September 28, 2010 GSP Subcommittee hearing Azurix stated, "Argentina has refused to enforce, through voluntary payment, a final and substantial arbitral award in favor of Azurix. Under these circumstances, U.S. law dictates the removal of GSP benefits for Argentina."[5]
At the September 28, 2010 GSP Subcommittee hearing, Azurix formally called for the removal of Argentina's benefits under the generalised system of preferences (GSP) [6].
In oral testimony, attorneys for Azurix, told the subcommittee that Argentina's refusal to comply with the 2006 ICSID award - which was upheld by an annulment committee last September - undermines the "very integrity of the foreign investment legal regime" and has an "erosive effect" on the ICSID Convention[7].
As of July 31, 2010 Azurix was owed more than $220 million by the Republic of Argentina.
