Operator at Port of Montevideo demands USD 600 million compensation in international arbitration

The owner of Montecon, a major operator at the Port of Montevideo, announced on Thursday its intention to seek $600 million from the Uruguayan government in international arbitration. The claim alleges a breach of the agreed-upon principles of free competition.

Neltume Ports, whose shareholders include the Chilean Ultramar and the Canadian ATCO group, argues that “Uruguay violated the investment agreement with Chile by favoring the operation of Terminal Cuenca de Plata (TCP) through the extension of the concession to the Belgian company Katoen Natie until the year 2081, eliminating the regime of free port competition,” according to a statement sent to AFP.

Montecon is the primary operator of public docks, while Katoen Natie won the bid in 2001 to build and manage a container-specialized platform at the Port of Montevideo for 30 years. The TCP is 80% owned by the Belgian company and 20% by the National Ports Administration (ANP), a state entity.

In February 2021, after Katoen Natie threatened a $1.5 billion lawsuit against the Uruguayan government under the Investment Protection Treaty with Belgium, citing unfair competition, President Luis Lacalle Pou’s government signed an extension of the concession for 50 years.

Now, facing estimated “damages and losses” of $600 million due to the regulations arising from the agreement with Katoen Natie, Neltume Ports notified the General Directorate of International Economic Affairs of the Ministry of Foreign Affairs on January 18 about the initiation of an international arbitration process, which will commence in the next 90 days.

They state that the case will be submitted to the International Centre for Settlement of Investment Disputes (ICSID) of the World Bank Group or according to the Arbitration Rules of the United Nations Commission on International Trade Law (UNCITRAL).

According to the notice, Neltume Ports and its investment in Montecon were given “less favorable treatment” than TCP and Katoen Natie.

“The loss of revenue for Montecon resulted in a 40% reduction in its gross margin in 2022, its operating result decreased by 69%, profits fell by 71%, and operating costs increased by more than seven percentage points,” the statement, released after reports on the lawsuit by the weekly Búsqueda, states.

Furthermore, Montecon “had to bear the costs and expenses of compensations resulting from the dismissal or alteration of working conditions for more than 120 workers,” the text adds.

The Uruguayan government has not immediately responded to AFP’s request for comment.

The Port of Montevideo, Uruguay’s most significant port, is strategically located in the country’s capital on the banks of the La Plata River, making it a crucial hub for maritime traffic.

Source: La Nación

Original news piece: https://www.lanacion.com.ar/agencias/operador-del-puerto-de-montevideo-reclamara-usd-600-millones-en-arbitraje-internacional-nid25012024/

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