Neustar Inc v The Republic of Colombia ICSID Case No. ARB/20/7 - Request for Arbitration - 23 December 2019
Reproduced from www.worldbank.org/icsid with permission of ICSID.
I. REQUEST TO REGISTER THIS ARBITRATION
1. Neustar, Inc. ("Neustar") and its enterprise. CO Internet SAS (".CO Internet") (collectively, "the Claimants"), hereby respectfully requests that the Secretary- General of the International Centre for Settlement of Investment Disputes ("the Centre") register this arbitration against Respondent, the Republic of Colombia ("Colombia"), concerning the claims stated herein.
2. Such request is made pursuant to Article 36 of the Convention on the Settlement of Investment Disputes Between States and Nationals of Other States ("the ICSID Convention"); Rules 1 and 2 of the Rules of Procedure for the Institution of Conciliation and Arbitration Proceedings ("the Institution Rules"); and Articles 10.16.1(a), 10.16.1(b) and 10.16.3(a) of the Trade Promotion Agreement between the Republic of Colombia and the United States of America ("the TPA").
III. THE BACKGROUND TO AND SUMMARY OF THE DISPUTE
9. The following statement is a short, general and abbreviated description of the facts.
It is being submitted for the limited purpose of showing information concerning the issues in dispute, indicating that there is, between the parties, a legal dispute arising directly out of an investment - as required by Rule 2(1)(e) of the Institution Rules.
The Claimants will present a full statement of the facts together with supporting evidence and legal grounds at the appropriate stages of this proceeding.
10. This dispute primarily concerns the commercial expansion and administration of the country-level top-level domain ("ccTLD") for Colombia, ".CO" (as in the domain name www.example.co).
11. In 2009, following a lengthy public consultation and tender process,. CO Internet (then a joint venture between Arcelandia SA and Neustar) was awarded the concession for the promotion, administration, technical operation and maintenance of the. CO domain (the "Concession").
12. In 2014, Neustar purchased Arcelandia's shares in. CO Internet and became the sole shareholder of. CO Internet. The Respondent authorized Neustar's purchase of these shares and registered its investment in the Colombian Central Bank.
13. Neustar and. CO Internet have achieved significant results in the first ten years of the Concession, including in terms of growth of the domain, the branding, the security, and the technical measures put in place by Neustar and. CO Internet.
14. The. CO top-level domain (TLD) has become particularly valuable in that it has come to represent the world's single, most credible alternative to the generic. com domain for worldwide commercial use. This positioning and development of the .CO domain is the direct result of Neustar/.CO Internet relentlessly marketing and spending upwards of $60 million dollars over the last 10 years through long-term branding programs for the. CO domains (both inside of Colombia and internationally), resulting in. CO becoming the domain of choice for innovators, entrepreneurs, and start-up businesses worldwide. Neustar made these efforts and substantial investments in. CO Internet in part because it knew that it was entitled to extend the Concession for an additional 10 years.
15. As just some examples of these substantial investments,. CO Internet ran three Super-Bowl Ads, posted billboards in Times Square, and made countless other massive branding investments. Over the past nine years, Neustar/.CO Internet have consistently sponsored an average of between 800 - 1,000 start up/business development events on five continents to introduce Colombia's TLD to the global business population and to grow domain registrations and usage. In addition, Neustar has opened marketing offices in China, India, EU, Australia, United States and Colombia. As a direct result of these efforts and investments,. CO has become one of the fastest growing and most dynamic domains in the world. In less than a decade, the. CO name space has grown from just under 28,000 domain names registered only inside of Colombia to nearly 2.3 million domain names registered by users in nearly 200 countries and territories worldwide, making it the 20th largest TLD in the world (out of approx. 1,500) and the second largest in Latin America. In addition,. CO Internet spent substantial effort to ensure that the TLD would be licensed in China, opening up an additional market that will add substantial registrations for years to come.
16. The main feature that demonstrates the value that has been created in the. CO name space is the fact that. CO is utilized daily by world leading businesses and brands as part of their global branding and marketing efforts. By way of example, Amazon (a.co), Apple (apple.co), Google (g.co and campus.co), Station F (stationf.co), Volvo Car Mobility (m.co), Mirror (mirror.co), Snapchat (s.co), Twitter (t.co), Taco Bell (ta.co), Brit + co (brit.co), Angel List (angel.co), 500 Startups (500.co), Starbucks (sbux.co), and countless more.
17. These marketing efforts, described in small part above, have positioned Colombia in the spotlight of the global domain industry, and will resonate for years to come as they were long-term investments made by Neustar/.CO Internet into the. CO domain.
18. On 21 September 2018,. CO Internet expressed its intention to formalize the extension of the Concession for a further period of ten years, in exercise of its rights under Colombian Law 1065 of 2006 and the Concession. Despite making initial signs that it would comply with Colombian law formalities and the terms of the Concession, the President of Colombia abruptly announced in March 2019 that he had decided to not extend the Concession and instead launch a public tender, thus ignoring the Concession extension process entirely.
19. The President's decision has mostly been implemented by the Ministry of Information Technologies and Communications ("MinTIC"), acting in its capacity (under Colombian law) as regulator of the. CO domain.
20. Despite repeated entreaties by the Claimants, the Respondent has pushed forward with the tender process. Not only has the Respondent failed to stop the tender, it has engaged in actions that call into question the propriety and regularity of the tender process. As one example, MinTIC has held closed-door meetings with Neustar's competitors - while deliberately excluding Neustar - where proprietary information was disclosed by Respondent.
21. In addition, Respondent's tender was designed to exclude. CO Internet and Neustar and to favor Neustar's competitor. Specific requirements in the original Terms of Reference included qualifications that. CO Internet and Neustar could not meet, despite the fact that. CO Internet has been successfully and unquestionably managing and promoting the domain for ten years and surpassed the plan presented to the government in 2009 by 150%. Because. CO Internet has been required to make disclosures as to information related to the company, Respondent was aware when drafting the Terms of Reference that. CO Internet and Neustar would not likely be able to satisfy these requirements. The violations and abuses were so significant that Nuestar/.CO requested that the Attorney General (Procurador General de Nación) supervise the tender process.
22. Troublingly, Respondent has included with the tender an opaque and subjective qualification criteria, thereby creating a significant risk of improper conduct in connection with the tender. As a whole, by the manner by which Respondent has acted and the tender documents themselves have been drafted, the process has already been tainted and does not comply with Transparency International's Minimum Standards for Government Contracting.
23. Thus, the Government's decision and the resulting actions arising therefrom were in breach of. CO Internet's rights under the Concession and Law 1065, and of Neustar/.CO's rights under the TPA.
24. Neustar and. CO Internet have already been harmed by Respondent's actions and will be further harmed if Respondent continues with the tender process and its other ongoing mistreatment of Neustar and. CO Internet.
IX. REQUEST FOR RELIEF
141. As a result of the Republic of Colombia's actions and breaches as described briefly above, without limitation and reserving Claimant's right to supplement these prayers for relief, including without limitation in light of further action which may be taken by Colombia, Claimants respectfully requests an award in its favour,
141.1 Finding and declare that Colombia has breached its obligations under the TPA;
141.2 Finding and declare that Colombia has breached its obligations under the Investment Agreement (i.e. the Concession);
141.3 Finding and declare that such breaches have cause Neustar and. CO Internet to suffer loss and/or damage;
141.4 Ordering Respondent:
141.4.1 to provide Neustar and its enterprise11. CO Internet restitution and to pay them such additional compensation and damages as is necessary in order to wipe out all the consequences of Colombia's unlawful conduct; or
to provide other relief that may be necessary to wipe out the consequences of Colombia's wrongful actions.
141.4.2 in lieu of such restitution,12 or if such restitution is not made within a reasonable period to be determined by the Tribunal, to pay Neustar and its enterprise (.CO Internet) full compensation and damages in accordance with the applicable law for the breaches pleaded above, in an amount to be established in the proceeding, but which Neustar presently estimates to be in excess of US$350 million;
141.5 In the alternative to the preceding paragraph, ordering Respondent to pay Neustar and its enterprise (.CO Internet) full compensation and damages in accordance with the applicable law for the breaches pleaded above, in an amount to be established in the proceeding, but which Neustar presently estimates to be in excess of US$350 million;
141.6 In any event, ordering Respondent:
141.6.1 to pay all sums awarded by the tribunal gross up of any taxes that may be imposed by Colombia on or affecting such sums;
141.6.2 to pay Neustar pre- and post-award compound interest on all sums awarded by the tribunal until the date of payment in accordance with the applicable law;
141.6.3 to pay Neustar all of its legal and other costs and expenses in respect of the arbitration, plus compound interest thereon;
141.6.4 to bear in full the arbitration costs (including the fees and disbursements of the arbitrators and the costs of the Centre),
12 As required by Article 10.26.1(b) of the TPA.
including by ordering Colombia to pay to Neustar any share paid in advance by it in respect of such costs, plus compound interest thereon; and
141.7 Ordering such further or additional relief as may be appropriate in the circumstances under the applicable law.
Respectfully submitted on the 23rd of December 2019,