Compass Lexecon’s client Pan American Energy LLC (PAE), one of the largest hydrocarbons producers in Argentina prevailed in its ICC arbitration request to early terminate a long-term natural gas supply contract with Aluar Aluminio Argentino S.A.I.C., a major aluminum producer. The dispute centered around the issue of whether foreign exchange restrictions introduced by the Argentine government in late 2011 had produced a distortion in the natural gas price received by PAE, which in turn could trigger a clause allowing early termination of the supply contract. The contract involved daily natural gas deliveries of 2.13 million m3. The ICC Tribunal sided with the opinion of Compass Lexecon’s experts Dr. Manuel A. Abdala and Mr. Marcelo A. Schoeters who showed that the type of formal and informal restrictions imposed on foreign currency transactions created dual exchange markets which ultimately ended up reducing the market value of natural gas sold by PAE, once measured in hard currency. The Tribunal also sided with Dr. Abdala and Mr. Schoeters’ opinion that the foreign exchange market used in the contract could no longer be characterized as a ‘single’ and ‘free’ exchange market.
Compass Lexecon’s experts were supported by a team of economists led by Ariel N. Medvedeff in the Buenos Aires office and included Andrés M. Casserly, Federico Gonzalez Loray and Ramiro Gamen. Compass Lexecon worked with a legal team led by Julio César Rivera and Julio César Rivera (h) of Rivera & Asociados, and with external counsel Ignacio Pérez Cortés.