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Capital Markets

Argentina settles majority of claims filed with Icsid

Move helps normalize relations with international financial community.

Argentina has settled more than half of the 36 cases that multinational companies have filed against it at the International Centre for the Settlement of Investment Disputes.

Most of the claims against it – which total $17 billion – stem from the breach of commercial contracts during the country’s severe economic crisis of 2001/02, when it repudiated on its sovereign debt, sharply devalued the peso and put in place emergency economic measures.

At least 17 of the cases before Icsid have now been settled or suspended, as a result of direct out-of-court bilateral negotiations with the companies. The Argentine government managed to get the claims withdrawn in exchange for concession extensions, tariff increases, subsidies and tax exemptions.

Esteban Fernández Medrano, a partner at economic consultants Macrovision in Buenos Aires, says: "I think resolution of the claims is important because they represent contingent liabilities. In the medium to long term, the country requires a normal relationship with the international financial community. From 2009 onwards, the country’s financial needs will be more pressing and it will want to be able to tap the international capital markets directly, rather than through the placement of joint bonds with Venezuela, for example.

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