On September 20, 2024, the Arbitral Tribunal of the International Center for the Settlement of Investment Disputes (ICSID) rendered an award and thus ending the four-year investment dispute between the American company Vercara LLC (formerly Neustar, Inc), as an investor and the Republic of Colombia, as a host State.
In 2020, Vercara LLC initiated an arbitration proceeding before ICSID, seeking payment of US$350 million from the host State, the Republic of Colombia, due to a breach of the Trade Promotion Agreement (TPA) concluded between the USA and Colombia. The Claimant contended before the Arbitral Tribunal that the Concession State Contract for administration of the “.co” domain, which should have run for a term of 10 years, i.e. from 2009 until 2019, could be automatically extended for another term of 10 year, making Vercara LLC the concessionaire for administration of the “.co” domain until 2029. Additionally, the Claimant stated that in the new tender process for administration of the “,co” domain initiated by the Government of Colombia in 2020, the host State, contrary to the TPA and the Concession State Contract, violated the standards of fairness and transparency in a way that set such tender terms that would make it impossible for Vercara LLC to take part in the tender process and would only allow the participation of another company that is one the biggest competitors of Vercara LLC.
Contrary to the Claimant’s allegations, the Republic of Colombia, as a Respondent, pointed out that there is no jurisdiction of the ICSID for the settlement of this dispute, and that in case jurisdiction is established, the claim should be dismissed as unfounded. In relation to the jurisdiction, the Respondent stated that by initiating a proceeding before the competent state judicial authorities in Colombia, the Claimant lost its right to have the same dispute settled by arbitration. Additionally, as basis for the lack of jurisdiction of the Tribunal, the Respondent raised the issue of whether the present dispute is by itself “an investment dispute” as well as the issue of prematurely initiating the arbitral proceedings. With regards to the merits, the Respondent asked the Tribunal to reject Claimant’ claims, pointing out that the host State has granted fair and equitable treatment of the investor, and that the investor failed to prove the existence of discrimination and violation of the provision of the TPA.
The Arbitral Tribunal, after conducting the arbitral proceedings and looking into the written submissions, as well as holding an oral hearing, decided in favour of the Respondent, the Republic of Colombia. It is important to note that the Arbitral Tribunal found that it has no jurisdiction for the settlement of this dispute and rejected Claimant’s claims as unfounded. With this decision, the Respondent, the Republic of Colombia avoided an obligation to pay USD$350 million to the investor.