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BANCO POPULAR: NEW INVESTMENT ARBITRATION AGAINST SPAIN

BANCO POPULAR: NEW INVESTMENT ARBITRATION AGAINST SPAIN

MORE ARBITRATION PROCEEDINGS AGAINST THE KINGDOM OF SPAIN

A group of 46 Mexican investors (35 Mexican physical persons and 11 Mexican entities organized under the laws of Mexico), initiated an investment arbitration against Spain, which they accuse of the virtual expropriation of at least 470 million euros. The arbitration claim was registered on October 4 at the World Bank’s Center for the Settlement of Investment Disputes (ICSID), eight months after the affected parties warned in a letter to the Spanish government that they would resort to this remedy if no agreement was reached.  Formally two claims have been filed: one before the ICSID and the other according to the arbitration rules of the United Nations Commission on International Trade Law (UNCITRAL).

The plaintiffs accuse expropriation and discriminatory treatment for the government’s decision to sell Banco Popular Español (BP) to Banco Santander in June 2017, for one euro, which caused the total loss of capital invested from 2013 to 2016. The claimants’ list include several of the country’s most important businessmen. In fact, the investment made by the Mexican group of investors, including claimants, was so considerable that they earned a seat on the Banco Popular Board.

Mexicans accuse the Spanish government of ignoring valid offers of private financial aid to rescue BP, which was going through a liquidity crisis, and of rigging its delivery to Santander, through the so-called Hippocrates Project. According to the claimants, the Spanish Government’s Fund for Orderly Bank Restructuring (FROB) is pointed as the main responsible party, which would have violated the 2006 Mexico-Spain Agreement for the Reciprocal Promotion and Protection of Investments.

A copy of the request for arbitration before the ICSID can be found here.

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