7/7/2011 - Republic of Peru v. Tza Yap Shum
Compass Lexecon expert, Andres Chambouleyron, supported by Julian Delamer of Compass Lexecon’s Buenos Aires office, testified before a Tribunal at a recent ICSID Hearing. The Claimant alleged that The Republic of Peru had expropriated its investment in early 2005 by freezing its bank accounts due to a tax debt with the Government. Chambouleyron showed that damages to Claimant, a Chinese national (Mr. Tza Yap Shum) by The Republic of Peru, were less than US $1,000,000, while the opposing expert argued that damages were as high as US $20 million, based on a DCF analysis that incorporated the sharp increase in worldwide fish flour prices since mid 2005. The Tribunal rejected the opposing expert’s DCF model criticizing its use of hindsight information unknown at the time of expropriation and determining that it was too speculative given the company’s lack of a track record of profits prior to Peru’s measures. Instead, the Tribunal adopted Chambouleyron’s recommendation to use an “adjusted book value” approach. The Tribunal also followed Chambouleyron’s recommendation to use the 10-year US Treasury bond rates for purposes of pre-judgment interest calculations, based on the concept that Claimant was no longer exposed to commercial risks after its assets were expropriated. The Republic of Peru was represented by Benno Kimmelman, Stephen Jagusch, Anthony Sinclair and Nicole Duclos of Allen & Overy. The panel’s opinion is available at http://italaw.com/documents/TzaYapShumAward.pdf.