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The International Centre for Settlement of Investment Disputes (ICSID) ruled in favour of Peru in a decade-long dispute with gold dealer Kaloti Metals & Logistics, LLC.
Between 2013 and 2014, Kaloti accused Peru of violating provisions in the Trade Promotion Agreement (Peru-United States TPA), due to the temporary seizure of five gold shipments meant to be exported from Peru to the US but whose origins were unclear. Peruvian authorities halted the trade deal alleging the gold may have resulted from illegal mining operations.
The Miami-based precious metals trader, thus, also accused Peru of defamation and “ruining its reputation” internationally.
However, ICSID rejected all of the claims for lack of jurisdiction and ordered the plaintiff to reimburse the Peruvian State for all the legal costs associated with the case, including 100% of the fees charged by lawyers and experts.
In its defence, Peru argued that Kaloti’s claims were outside the jurisdiction of the Arbitration Tribunal for several reasons, including the fact that the claimant had failed to prove that it owned or controlled an investment covered under the protection of the Peru-United States TPA.
The Peruvian State also noted that the purchase of the gold shipments in question by Kaloti constituted a purely commercial transaction that did not comply with the characteristics that an investment must meet following what’s stipulated in the TPA and the ICSID Convention.
The Andean country indicated that none of the measures taken by authorities were contrary to the country’s obligations under the Peru-United States TPA and that they were reasonable and justifiable as they responded to the existing legal framework to address illegal mining and money laundering.
“The court accepted the jurisdictional arguments presented by the Peruvian State, concluding that the claimant had not demonstrated that it owned or controlled an investment in Peru, in accordance with the terms provided in the Peru-United States TPA,” Peru’s State Coordination and Response System in International Investment Disputes said in a media statement. “According to the argument developed by the Arbitration Court, the claimant did not demonstrate that it owned or controlled the gold from the five seized shipments, and has not been able to substantiate the claim that it had investments through a company established in Peru.”
The ICSID also rejected the $154-million compensation claimed by Kaloti and ordered the company to pay over $3.5 million to cover the legal fees and expenses incurred by Peru, as well as almost $368,000 for procedural costs.
