Originally from World Arbitration And Mediation Review (WAMR)

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ARGENTINA'S CRUMBLING

INVESTMENTS: THE FAIR AND
EQUITABLE TREATMENT DOCTRINE
IN ENRON CORPORATION V.
ARGENTINE REPUBLIC

On February 26, 2001, the International Centre for Settlement of
Investment Disputes (ICSID) received a request for arbitration from Enron
Corporation (Enron) and Ponderosa Assets L.P. against the Argentine
Republic.1 This dispute stemmed from Enron's partial investment in a gas
company in Argentina after the nation opened its natural resources to
international investors. The bilateral investment treaty (BIT) signed
between the United States and Argentina was the foundation for claims
brought in the case.

I. BRIEF SUMMARY
Enron claimed that Argentina violated an investment contract that it
signed which was backed by the BIT between the United States and the
Argentina. In order to facilitate privatization of the gas industry within
Argentina, the government implemented a Standard Gas Transportation
License under Decree 2255/92 which was supposed to last thirty five years.2
Enron claimed that it relied on the conditions set forth in those enactments
when deciding to invest in the local gas company, Transportadora de Gas
Del Sur (TGS). Enron stated that the enactments guaranteed the following:

1. The calculation of tariffs in US dollars;
2. A semi-annual adjustment in tariffs according to changes in the US
Producer Price Index (PPI);