The government of Argentina has been ordered to pay Italy’s Webuild $147m in compensation for breach of contract over a road and bridge project completed in 2004.
The 28 April decision by the International Centre for Settlement of Investment Disputes (ICSID), a World Bank body, follows a 10-year arbitration case.
It started in 1998, when Argentina signed a public-private deal with Webuild, then called Salini Impregilo, to build and operate a 60km road between the cities of Rosario and Victoria and a 608m-long bridge over the Paraná River.
Webuild was to recoup its investment by collecting tolls over the next 25 years.
Economic turmoil
Later in 1998, however, a series of shocks sent Argentina’s economy into recession.
Webuild said the project ran into trouble with delayed payments, the collapse of a financing agreement with the Inter-American Development Bank, and the introduction of Argentina’s 2002 Emergency Law during the economic crisis.
The law decoupled the Argentine peso from the US dollar, converted public contracts originally signed in dollars into pesos, and froze toll rates – all of which Webuild said “severely impacted the financial sustainability of the concession”.
The project completed in 2004, but Argentina terminated Webuild’s toll concession in 2014 amid another economic crisis, sparking the arbitration case.
Violation of Argentine law
ICSID ordered the Argentine government to pay compensation following an initial decision in its favour in 2023 and Argentina’s subsequent appeal, for failing to restore the economic balance of the contract after the end of the 2001 financial crisis.
ICSID found the failure to be in violation of Argentine law, the concession contract, and the Bilateral Investment Treaty between Italy and Argentina.
It determined that Argentina’s conduct constituted a breach of its obligation to provide “fair and equitable treatment” to the company as a foreign investor.
Webuild said the decision “reinforces the principles underlying the protection of foreign investments”.
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Webuild awarded $147m compensation for Argentina project Global Construction Review.
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