Emilio Agustín Maffezini v The Kingdom of Spain

Year of the award: 2000
Forum: ICSID
Applicable investment treaty: Argentina - Spain BIT (1991)

Arbitrators
Mr. Francisco Orrego Vicuña, President
Mr. Thomas Buergenthal
Mr. Maurice Wolf

Executive summary

In 1989, Mr. Maffezini, an Argentine investor, established in Spain a joint venture for the production of chemicals (EAMSA), where he held 70% interest. The remaining 30% of the company's stock belonged to SODIGA, a Spanish public entity. In 1992, the construction of the chemical plant and other EAMSA operations had to be discontinued because of company's financial crisis.

In the ICSID arbitration brought by Mr. Maffezini against Spain under the Argentina-Spain BIT, Mr. Maffezini blamed SODIGA, whose actions he attributed to the Kingdom of Spain, for misinforming him about the costs of the project, which turned out to be significantly higher than originally estimated. He also referred to the fact that in late 1991, 30 million Spanish pesetas had been irregularly transferred from his personal bank account as a loan to EAMSA, upon the order of SODIGA's representative in EAMSA.

The Tribunal dismissed all claims, except for the one relating to the unauthorized bank transfer. The Tribunal held that the latter episode was indeed attributable to Spain and constituted a violation of Spain's BIT obligation to accord protection and fair and equitable treatment to the Claimant. To compensate for this breach, the Tribunal ordered Spain to pay to Mr. Maffezini the amount of the mentioned bank transfer plus interest.

This case does not represent any significant value in terms of damages award, due to the undisputed amount of compensation (bank transfer) and the extreme brevity of the Tribunal's reasoning. Only the award of interest might be worth attention, as the Tribunal used different interest rates for pre-Award and post-Award interest as well as different frequency of compounding interest (annual compounding for pre-Award interest; monthly compounding for post-Award interest).