In January 2014, an arbitration tribunal [hereinafter “Tribunal”] awarded almost USD 29 million in damages to Guaracachi America, Inc. and Ruralec Plc [hereinafter “Claimants”] for the nationalization of the two companies’ jointly held shareholding in Empresa Eléctrica Guaracachi S.A. (hereinafter “EGSA”) by the Bolivian Government [hereinafter “Respondent”].1 To make its damage determination, the Tribunal evaluated the expert reports submitted by Claimants’ and Respondent’s respective experts. The Claimants’ expert estimated future market value damages at USD 77.5 million as of May 1, 2010 (the date of nationalization), plus USD 15.8 million in interest from the date of nationalization on February 29, 2012, when they filed their claim.2 The Respondent’s expert countered that, owing to the multiple errors in the Claimants’ expert’s analysis, the future market value of EGSA was nil.3 In other words, according to the Respondent’s expert, EGSA was not a “going concern.”4
In economic terms, a “going concern” is a firm with positive expected cash flows over time. Such positive cash flows are necessary to service existing debt and, critically, to access capital markets. The ability to remain a “going concern” and access capital markets underlies two seminal US Supreme Court decisions, Bluefield and Hope.