Colombia Investment Protections

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1. INTERNATIONAL LAW INVESTMENT PROTECTION FRAMEWORK

Colombia is a party to a number of international conventions and treaties governing the promotion and protection of foreign investments. These international instruments have been ratified with little guidance on how their provisions are interpreted in light of other national legislation, thereby creating uncertainty on how they will be interpreted by local courts.

Colombia signed the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (“ICSID Convention”) on May 18, 1993, and the country’s legislature approved the Convention through the enactment of Law 267 of 1996. The ICSID Convention, together with its implementing legislation, was found to be constitutional by the Constitutional Court[1] and entered into force for Colombia on August 14, 1997.[2] Colombia has not taken any measures, notifications or designations under Articles 25(1), (3), (4), 54(2), 68, 69, or 70 of the Convention.

Colombia has signed, ratified or is a party to the following agreements that provide investor-state dispute resolution procedures: [(i) the Colombia-Mexico Free Trade Agreement or G-2 Agreement (Chapter XVII), which entered into force on 1 January 1995, and the Protocol for the same, which was signed on 11 and 13 June 2011, but has not yet entered into force; (ii) the Colombia-Peru Bilateral Investment Treaty, and the Amending Protocol, which entered into force on 21 March 2004, and the New Agreement, which was signed on 11 December 2007, but has not yet entered into force; (iii) the Colombia-Spain Bilateral Investment Treaty, which entered into force on 22 September 2007; (iv) the Colombia-Chile Free Trade Agreement (Chapter 9), which entered into force on 8 May 2009; (v) the Colombia-Switzerland Bilateral Investment Treaty, which entered into force on 6 October 2009; (vi) the Colombia-El Salvador, Guatemala, Honduras Free Trade Agreement (Chapter 12), which was signed on 9 August 2007 and entered into force vis-à-vis Guatemala on 12 November 2009, El Salvador on 1 February 2010, and Honduras on 27 March 2010; (vii) the Colombia-United Kingdom Bilateral Investment Treaty, which was signed on 9 March 1994 and then signed again as revised on 17 March 2010, though neither version has yet to enter into force; (viii) the Colombia-Cuba Bilateral Investment Treaty, which was signed on 16 July 1994, but has not yet entered into force; (ix) the Colombia-United States Free Trade Agreement (Chapter 10), which was signed on 22 November 2006, but has not yet entered into force; (x) the Colombia-Canada Free Trade Agreement (Chapter 8), which was signed on 21 November 2008, but has not yet entered into force; (xi) the Colombia-China Bilateral Investment Treaty, which was signed on 22 November 2008, but has not yet entered into force; (xii) the Belgium/Luxemburg Bilateral Investment Treaty, which was signed on 4 February 2009, but has not yet entered into force; and (xiii) the India Bilateral Investment Treaty, which was signed on 10 November 2009, but has not yet entered into force.]

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2. INVESTMENT DISPUTES

To date, no international arbitral claims have been brought against Colombia under an international investment protection treaty and pursuant to the ICSID Convention, the ICSID Additional Facility Rules or the UNCITRAL Arbitration Rules. There are several reasons, particular to Colombia, which may help to explain this situation.

First, the State has a limited number of international investment agreements in force. Second, most of the country’s international investment treaties are fairly recent. For example, the bilateral investment agreement with Spain has been in force only since September 2007, even though Spanish companies have been major players in Colombia’s investment history since the 1990s. Colombia also only recently came to agreement with the United States on investment promotion and protection, as part of the negotiations for the Colombia-U.S. Free Trade Agreement, even though U.S. nationals have been responsible for the greater portion of foreign investment into Colombia in recent years.

Third, some of Colombia’s earlier investment frameworks were limited in scope. For example the Andean Community’s Decision 291 and the Colombia’s G-2 treaty with Mexico do not contain fair and equitable treatment, full protection, or observance of obligations provisions. Decision 291 also does not provide a dispute resolution mechanism for foreign investors.

Finally, a number of Colombia’s more attractive foreign investment sectors have very recently been liberalized, with former State monopolies being unbundled and privatized. This is particularly true in the hydrocarbons sector. Indeed, during the past years the overwhelming majority of foreign investment into Colombia has been in the oil and gas, and mining sectors.[3]

[1] Constitutional Court, Ruling C-442 (19 Sept. 2006).

[2] Decree No. 2783 (Colombia) (20 Nov. 1997). See also ICSID Secretariat List of Contracting States and other signatories available on the institutional website.

[3] For the latest figures, refer to the Colombian government’s website for prospective foreign investors, available at www.investincolombia.com.co (accessed 7 July 2010).