3. In 2004, Lidercón, S.L entered into a concession contract with the Metropolitan Municipality of Lima ("MML") to build and operate motor vehicle inspection centers under the MML's authority within its territory, which is inhabited by between one-fourth and one- third of the population of Peru. The Contract is still in force, but Lidercón complains of a failure on the part of Peruvian public authorities to respect the condition of exclusivity to which it believes it is contractually entitled, and contends that it is also entitled by contract to be subject to supervision by MML instead of by the Ministry. While foreign investors in various countries have complained about suffering from discrimination, this is an unusual instance of a complaint about being deprived of the benefits of excluding competitors, local or foreign. (Lidercón also complains of discrimination, but of other kinds.) Lidercón contends the elimination of its claimed rights of exclusivity has been affected by Peruvian state instrumentalities in breach of the Spain/Peru Bilateral Investment Treaty.
4. In this arbitration, Lidercón alleges that the value of its investment has diminished to an extent which its Memorial evaluated as being in excess of US$95 million by reason of a number of adverse events, notably (A) a 2008 Law (the Ley ITV) setting out rules for operating a national system of vehicle inspection administered by the Ministry of Transportation and Communications ("MTC" or "the Ministry") which interfered with the rights Lidercón contends it was granted by MML, (B) the judicial declaration that a 2011 arbitral award favourable to Lidercón was partially unenforceable, and (C) a decision in September 2007 by INDECOPI, subsequently judicially confirmed, to the effect that MML Ordinance No. 694, which in effect authorized the grant of exclusive rights under the Concession Contract, was an illegal bureaucratic barrier. As a result, Lidercón has for years been exposed to restrictions, and to competition from its business rivals, in ways that infringe its concession, and alleges that these adverse developments have constituted breaches of the Treaty attributable to the State of Peru. Lidercón also complains of subsequent grave and improper interference with the operation of its inspection centers, which it says continued notwithstanding the pendency of the present arbitration and culminated in the closure of its centers by the authorities shortly after the September 2019 hearings.
5. In Peru, a national system of mandatory vehicle inspections began to emerge at the turn of the century. The 1999 Ley General de Transporte y Tránsito Terrestre ("1999 Law") established in Article 16 that the regulation and management of this system would form part of the "competencias y funciones" (jurisdiction and powers) of the Ministry, which in 2001 issued a Reglamento Nacional de Vehículos ("2001 Regulation") containing a chapter on motor vehicles which notably provided in Article 52(E) that the Ministry had the authority to regulate and supervise vehicle inspections in the country; in Article 52 (G) that vehicle owners were free to choose where they would obtain inspection certificates; and in Article 54(A) that the Ministry could delegate some of its functions to other entities.
6. The situation of the municipality of Lima was something of an anomaly. A few months before the issuance of the 2001 Regulation, the Ministry had agreed, in a Convenio de Gestión de Revisiones Técnicas de Vehículos en Lima Metropolitana (Management Agreement for the Technical Inspection of Vehicles in Metropolitan Lima) with MML, that the latter would supervise motor vehicle inspections in the capital. Nevertheless, so Peru contends, the delegation was never implemented according to its terms carried out with the result that the Convenio was never given effect.
7. In any event, the consortium comprised of the Claimant and Ivesur won the bid in 2004 for a concession from MML to build and operate motor vehicle inspection centers. As a result, Lidercón and Ivesur incorporated a Peruvian company, Lidercón Perú, S.A.C. (70% owned by Lidercón and 30% by Ivesur) that would operate the concession, as required by the Bases de licitación (Bidding Rules) and subsequently by the Concession Contract.
8. The Concession Contract was entered into by MML, Lidercón Perú and Ivesur on 2o September 2004. Contractual relations soon turned out to be difficult. By early 2008, Lidercón had initiated six separate arbitrations against MML under the Contract. Part of the difficulty, as will be explained below, resulted from the tension of different conceptions of the attribution of authority to regulate vehicle inspections as between the Ministry (nation-wide powers) and MML (regional powers in the dominant, densely populated region of the capital, where the problems of congestion and pollution are uniquely acute), as well as of the compatibility of a sole-provider as entidad revisora (inspection entity) with the public policy against monopolies.
9. The original texts of the documents examined by the Arbitral Tribunal and quoted in this Award are in the Spanish language, and all participants in these proceedings understand them in the original. Nevertheless, the proceedings have been bilingual, and the oral arguments by both sides were presented in English. For that reason, some passages of documents quoted below are rendered in translation to be consistent with the English words actually used in the hearings.
283. For the above reasons, the Arbitral Tribunal
1. Declares itself to have jurisdiction to hear the claims raised;
2. Declares the claims to be admissible;
3. Rejects the claims in their entirety in the absence of proof of breach of the Treaty;
4. Orders the Claimant to pay the Respondent USD 4,006,516.64 on account of costs;
5. Observes that the Concession Contract remains in force, with effects yet to be determined as necessary, preferably by negotiated accommodations rather than renewed disputation.