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Two weeks ago Repsol filed a complaint with the International Center for Settlement of Investment Disputes (ICSID), a division of the World Bank, over Argentina’s seizure of the energy company YPF, in whom Repsol owned a 51%. The ICSID has now agreed to begin the arbitration process, and although some legal experts claim it could take over a year to complete, the result could end up being the largest case ever against Argentina.
Repsol is demanding $10 billion in compensation for its lost 51% stake in the oil company, but Argentine government officials have claimed that the stake in YPF is worth far less.
The whole situation began back in May when Argentine president Cristina Fernandez seized control of YPF, claiming that Repsol had underinvested in the company, allowing for its production to decline massively over the years, despite the demand. Repsol has always denied underinvesting in YPF, and states that the illegal seizure was unlawful, discriminatory, and a violation of a bilateral investment treaty between Spain and Argentina.
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The ICSID told both Repsol and the Argentine government that have 30 days to name one arbitrator each to form part of a three-member panel which will oversee the case. The third member of the panel will be agreed upon by the two parties together.
Repsol has already sued Argentina through a US court back in May, and has threatened to sue any company that deals with YPF whilst it remains under the control of Argentina.
By. Joao Peixe of Oilprice.com
Joao is a writer for Oilprice.com