Reproduced from www.worldbank.org/icsid with permission of ICSID.
Notice of Intent to Submit a Claim to Arbitration Under Chapter Ten of the United States-Colombia Free Trade Agreement
In accordance with Article 10.16 of the United States-Colombia Trade Promotion Agreement ("TPA"), Joint Venture Foster Wheeler USA Corporation and Process Consultants Inc. (together, "FPJVC" or the "Investor") respectfully provides the Republic of Colombia ("Colombia" or the "Republic") with this notice of its intention to submit a claim to arbitration pursuant to Chapter Ten of the TPA.
I. Preliminary Statement
1. In 2009, Refineria de Cartagena, S.A. ("Reficar"), a state-owned enterprise, entered into a contract with FPJVC to provide certain project management services in connection with the refurbishment of an oil refine owned b the Republic the "Contract"
2. In 2010, in order to reduce costs and accommodate the demand of the engineering, procurement and construction ("EPC") contractor on the project, Reficar directed a material change in the scope of FPJVC's work. That change -- documented in correspondence, meeting minutes and a project evaluation commissioned by Reficar's own parent company -- shifted project management responsibility to Reficar itself, stripped FPJVC of the authority to direct the EPC contractor's work or control the EPC contractor's expenditures, and limited FPJVC to providing Reficar with support and project recommendations. Through completion of the project in 2016, FPJVC acted in accordance with the agreed narrowed scope of work without objection or other direction from Reficar.
3. In 2017, the Contraloria General de la Republica of Colombia (the "CGR"), commenced administrative proceedings against various entities and individuals, including FPJVC, for alleged acts, gross negligence or willful misconduct in the expenditure of Republic's funds in connection with the project. In June 2018, the CGR issued charges finding, in effect, that: (a) FPJVC was bound by the original text of the Contract with Reficar, without regard to the parties' later agreement and the course of performance; (b) FPJVC breached the Contract by not preventing increases in project cost and execution delays; (c) FPJVC was grossly negligent in managing state funds even though FPJVC had no authority over such expenditures and the conduct alleged amounted, on the face of the charges, at most to a breach of contract; and (d) FPJVC should be held jointly and severally liable for more than $2.4 billion of project cost overruns, even though the Republic, acting through Reficar, promised at the time of the investment that [...] Although 4,751 pages in length, the CGR charge wholly fails to describe, let alone document, any actions or omissions by FPJVC constituting gross negligence; rather, the charge is based on various cost overruns and the groundless assumption that FPJVC acted as the project manager.
4. The Investor hopes to be able to resolve these matters amicably, but in the event such a resolution cannot be achieved, now provides this notice of its intention to submit a claim to arbitration based on the Republic's denial of FPJVC's right to fair and equitable treatment (including, without limitations,) grossly departing from local law in finding FPJVC to be a fiscal manager, subjecting the Investor to conflicting directives of the Republic, denying FPJVC the same treatment afforded Reficar, depriving FPJVC of the right to arbitrate before the ICC all issues concerning the contract, stripping FPJVC of the limitations on liability and damages afforded in the contract, failing to give FPJVC with fair notice of the acts or omissions giving rise to the charges, and a reasonable opportunity to defend itself, all in breach of the TPA and the parties' investment agreement.
Footnotes omitted from this introduction, OCR errors may be present.