Brookfield Asset Management Inc. has filed arbitration against Peru over the illegal expropriation of toll roads, seeking US$2.7 billion in damages. The action is based on a free trade agreement with Canada. Lima’s government has previously been ordered to pay Brookfield but has refused. The city alleges bribery associated with the toll road concession. This conflict reflects broader governance and investment issues in Peru.
Brookfield Asset Management Inc. has initiated arbitration against the government of Peru, claiming that the country has unlawfully expropriated a series of toll roads that Brookfield operates in its capital, Lima. This dispute has historical roots but now escalates significantly, with Brookfield seeking damages of US$2.7 billion due to city measures that impede toll collection. The arbitration is pursued under the bilateral free trade agreement between Peru and Canada.
Brookfield contends that this latest legal action stems from years of arbitrary decisions by Lima’s municipal government and other state bodies that have hindered the firm’s ability to collect tolls. The city previously faced an order to compensate Brookfield US$200 million in earlier arbitration and court judgments but has reportedly not complied with this financial obligation.
In response to Brookfield’s arbitration filing, the Lima city administration expressed regret, claiming that it had no option but to suspend payments at toll booths deemed “inhuman and harmful” to local inhabitants. Furthermore, the city is countering with its own lawsuit in a U.S. federal court, alleging that the toll road concession was secured through bribery, a claim Brookfield strongly refutes, asserting its ownership followed ethical standards.
The ongoing arbitration represents a significant challenge for Lima’s mayor, Rafael Lopez Aliaga, who has pledged to eliminate Brookfield’s toll collections. Lopez Aliaga, holding conservative views and previously a presidential candidate, may also contemplate another run in the forthcoming election, making this conflict more politically nuanced.
This legal confrontation signals a deeper examination of infrastructure management and investment ethics within Peru, potentially reshaping the landscape for foreign investments in the region.
By navigating the complex legal terrain of toll management and expropriation, this case underscores significant issues related to governance, investment security, and economic relations between nations.
As the arbitration progresses, the eventual outcome may set vital precedents for international business operations and legal frameworks in Peru and beyond.
Brookfield’s arbitration case against Peru highlights significant concerns regarding the expropriation of foreign investments and the legal protections afforded under trade agreements. With a substantial financial demand and counterclaims of bribery and corruption, this dispute exemplifies the complexities faced by international companies operating in politically sensitive regions. The outcome may impact future foreign investment and regulatory practices within Peru, emphasizing the importance of government accountability and ethical business dealings.
Original Source: financialpost.com
