Termination of Bolivia-United States Bilateral Investment Treaty

On June 10, 2011, the Plurinational State of Bolivia delivered notice to the United States of America of the termination of the Treaty Between the Government of the United States of America and the Government of the Republic of Bolivia Concerning the Encouragement and Reciprocal Protection of Investment, signed on April 17, 1998 in Santiago, Chile and in force as of June 6, 2001.

The language of the Bolivia-United States BIT provides covered investors from one country substantive protections as regards their investments in the other country, and allows investors to submit disputes with the other country for resolution to binding international arbitration.

Pursuant to Article XVI(2) of the treaty, the termination of the treaty took effect on June 10, 2012.[1]  However, pursuant to the so-called "survival provision" of Article XVI(3) of the treaty, the treaty will continue to apply to covered investments established or acquired prior to the date of termination for an additional 10 years.  Consequently, investors of either country who made investments in the other country prior to June 10, 2012 may continue to enjoy the treaty's protections until June 10, 2022; but investments made after June 10, 2012 may not be protected by the treaty.

Bolivia's termination of the treaty follows on Bolivia's denunciation of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the ICSID Convention), which took effect on November 3, 2007.[2]

Notwithstanding Bolivia's denunciation of the ICSID Convention, there currently are two ICSID cases pending against Bolivia:  Pan American Energy LLC v. Plurinational State of Bolivia (ICSID Case No. ARB/10/8), proceeding under the Bolivia-United States BIT and relating to the exploration and exploitation of hydrocarbons, and Quiborax S.A., Non-Metallic Minerals S.A. & Allan Fosk Kaplún v. Plurinational State of Bolivia (ICSID Case No. ARB/06/2), proceeding under the Chile-Bolivia bilateral investment treaty and relating to a mining concession.

The Pan American Energy case, which had been suspended but recently resumed, involves claims under the Bolivia-United States BIT.  The case was registered more than two years after Bolivia's denunciation of the ICSID Convention and observers have noted that it raises questions as to the availability of ICSID in a situation where a denunciation of the ICSID Convention had taken effect but investment treaties providing for ICSID arbitration continue to remain in place.[3]  The case also illustrates that investors with investments pre-dating the termination of the Bolivia-United States BIT still may be able to avail themselves of the protections of the treaty.

[1] See Notice of Termination of United States-Bolivia Bilateral Investment Treaty, A Notice by the State Department and the Trade Representative, Office of the United States, published in the Federal Register: The Daily Journal of the United States Government, May 23, 2012, available at https://www.federalregister.gov/articles/2012/05/23/2012-12494/notice-of-termination-of-united-states-bolivia-bilateral-investment-treaty.

[2] See Bolivia Submits a Notice under Article 71 of the ICSID Convention, ICSID News Release, May 16, 2007, available at https://icsid.worldbank.org.

[3] See Sebastian Perry, Bolivia Test Case Resumes at ICSID, Global Arbitration Review, Sept. 14, 2012, available at http://www.globalarbitrationreview.com/news/article/30818/bolivia-test-case-resumes-icsid (paid service).