Reproduced from www.worldbank.org/icsid with permission of ICSID.
Request for Arbitration
1. Amec Foster Wheeler USA Corporation and Process Consultants, Inc., individually and as members of a contractual joint venture named FPJVC (collectively, "FPJVC" or "Claimants") hereby submit this Request for Arbitration with respect to the legal dispute described herein with the Republic of Colombia ("Colombia" or "Respondent") (Claimants and Respondent together, the "Parties"), in accordance with Chapter 10 of the United States-Colombia Trade Promotion Agreement (the "TPA"), which entered into force on May 15, 2012.1 Claimants hereby elect to proceed with this arbitration under the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the "ICSID Convention") and the ICSID Rules of Procedure for Arbitration Proceedings (the "ICSID Arbitration Rules"), in accordance with Article 10.16.3(a) of the TPA.2
2. Respondent has violated Claimants' rights under the TPA and international law.
As set forth below, Respondent, acting through the Contraloría General de la República of Colombia (the "CGR"), has improperly initiated a fiscal liability proceeding against Claimants in which Respondent seeks approximately US$2.43 billion, 3 despite the lack of any colorable legal or factual basis to do so, causing serious and substantial damage to Claimants even in advance of a final ruling. It is, moreover, clear that the CGR has prejudiced the case, and that a ruling adverse to Claimants is a virtual certainty.
3. This dispute arises from a November 2009 contract between FPJVC and Refinería de Cartagena S.A. ("Reficar") (the "Contract") for the provision of services in connection with the modernization and expansion of a large, state-owned oil refinery located in Cartagena, Colombia (the "Project").4 Reficar is wholly owned by Ecopetrol, S.A. ("Ecopetrol"); Respondent, in turn, owns approximately 88% of Ecopetrol's voting capital stock and appoints the majority of Ecopetrol's board of directors, and, through the board, Ecopetrol's chief executive officer, as well as the entire Board of Directors of Reficar. Accordingly, the decision-making authority for both Reficar and Ecopetrol is vested in Respondent.
4. The initial terms of the Contract contemplated a traditional project management consultant role for FPJVC in which FPJVC would have had customary project management responsibilities and decision-making authority over the Project. Shortly after signing the Contract, however, Reficar radically changed FPJVC's scope of work so that FPJVC was not acting as project manager and owner's representative with decision-making authority. Instead, Reficar assumed management of the Project itself and acted as the sole decision-making authority. FPJVC personnel worked as consultants under the direction of Reficar's project management team, but neither they nor FPJVC had authority over management of, or the expenditures for, the Project.
Reficar, as well as FPJVC and Ecopetrol, acknowledged and memorialized these changes in the scope of FPJVC's work both in subsequent communications and documents, and throughout the course of performance of the Contract.
5. Also intimately involved in the Project were Chicago Bridge & Iron ("CB&I"), which was the Engineering Procurement and Construction ("EPC") contractor, and Ecopetrol and its Board of Directors, which worked with Reficar to make decisions about the Project and to approve specific large increases in the Project's capital expenditures reflected by "Change Controls."
6. In order to assist Ecopetrol with its oversight of the Project and to monitor its investment, Ecopetrol retained a construction consultant, Jacobs Consultancy ("Jacobs"), 5 to independently investigate and issue reports tracking the progress of the Project, including identifying any delays and cost overruns and the reasons for them. Toward the end of the Project, Jacobs issued its October 2015 Report (the "Jacobs Report") to Ecopetrol, which concluded unequivocally that FPJVC was not to blame for the Project delays and cost increases, emphasizing, among other things, that Reficar made all major decisions regarding the Project and that FPJVC's "staff was placed only in positions of support, with inexperienced personnel of REFICAR in positions of direct control."6 The Jacobs Report found that Reficar had elected to itself assume responsibility for management, budget, and administrative costs and expenses from the Project.
As noted above, Ecopetrol, an agency and instrumentality of Respondent, and the corporate parent of Reficar, commissioned the Jacobs Report.
7. The Contract provides [...]
8. The Contract further provides [...]
9. In 2018, Respondent initiated the CGR proceeding against FPJVC, CB&I, the Ecopetrol Board of Directors, and Reficar's directors and six of its officers, alleging that they were jointly and severally responsible for approximately US$2.43 billion in alleged damages to Colombia arising out of the claimed mismanagement of the Project.8
10. Under Colombian Law 610 of 2000, the CGR is empowered to bring fiscal liability proceedings only against fiscal managers - that is, "those who have decision-making power over State resources or public funds under their control" 9 - when, through fraudulent or grossly negligent conduct with respect to public funds, they cause economic harm to the Colombian State.10
11. The Colombian Constitution expressly limits the CGR's jurisdiction to the supervision of "fiscal management of the State":
Fiscal control is a public duty exercised by the Comptroller General of the Republic,
which supervises the fiscal management of the administration and private
individuals or entities that manage the Nation's funds or assets.
Such control shall be exercised in a subsequent and selective manner in accordance with the procedures, systems, and principles established by law.
The supervision of the fiscal management of the State includes the exercise of financial control, management and results, based on efficiency, economy, equity and the valuation of environmental costs. In exceptional cases, provided by law, the Comptroller may exercise subsequent control over the accounts of any territorial entity.
The Comptroller is a technical entity with administrative and budgetary autonomy.
It shall not have any other duties than the ones related to its own organization. . . .
Constitución Política de Colombia, Art. 267.
12. FPJVC was not a fiscal manager under Law 610, and there is no colorable basis upon which it could be asserted to be one. The CGR, unsurprisingly, also failed to plead the elements required by Article 5 of Law 610:
- The CGR did not include any specific allegations related to fraudulent or grossly negligent conduct and made no effort to articulate how FPJVC's conduct caused the alleged harm, instead asserting mere conclusory allegations inferring wrongful conduct and causation based upon the fact that the Project grew in cost and was delayed, essentially seeking to impose strict liability upon FPJVC for the fiscal increases; and
- The CGR did not identify specific economic damage to the State, maintaining instead that Project budget increases that Reficar and Ecopetrol approved constituted such damage.
Consequently, the CGR's exercise of jurisdiction over FPJVC is a grave misapplication of Colombian law that constitutes a denial of justice and a breach of the fair and equitable treatment standard.
13. Significantly, the CGR dismissed the Ecopetrol Board of Directors - all of whom are prominent Colombian nationals - even though those directors approved Project expenditures and had some decision-making authority, and FPJVC did not approve expenditures or have any decision-making authority. The CGR's refusal to apply the same legal standard to FPJVC, a foreign investor, further confirms the unlawful treatment of FPJVC.
14. Even if there were some colorable jurisdictional basis for the CGR proceeding - although there is not - Colombia's action would nonetheless violate FPJVC's rights under the TPA. The theory under which Colombia is proceeding against FPJVC violates its rights in two ways. First, the CGR proceeding deprives FPJVC of the protections of the Contract negotiated with Reficar, an agency or instrumentality of Colombia, notably FPJVC's right to have all disputes resolved through arbitration under the ICC Rules. Moreover, the liability and damage theories on which the CGR is proceeding constitutes a violation of FPJVC's most basic rights, including its right to due process. The CGR has simply claimed damages for expenditures on the Project in excess of Reficar's budget - which was based on the estimate of the EPC Contractor, CB&I, and not of FPJVC - and asserted that FPJVC is grossly negligent in failing, in some undescribed manner, to prevent those expenditures. Colombia, acting through the CGR, does not even attempt to show a causal link between those expenditures, all of which Reficar approved, and any act or omission of FPJVC, let alone acts even arguably constituting gross negligence. To impose damages on such a basis, or to seek to do so, violates FPJVC's rights under the TPA, as the recent award against Colombia in the Glencore arbitration makes clear.11
Footnotes omitted from this introduction