The Colombian State has definitively lost the international dispute against the Spanish multinational Telefónica before the International Centre for Settlement of Investment Disputes (ICSID). The decision of the ad hoc Committee of this international arbitration body obliges Colombia to immediately pay compensation that, adding the principal capital, accrued legal interest, and process costs, exceeds 500 million euros, sources familiar with the process informed EL PAÍS/Cinco Días.
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The ruling confirms the obligation to return the 379.8 million dollars (357.6 million euros) that Telefónica disbursed in 2017 after an adverse national award. To this figure is added an annual interest of 5% calculated from 2018 until the effective payment date (around 153 million euros), in addition to the legal costs derived from eight years of international arbitration. The tribunal determined that Colombia failed to comply with its obligation to grant “fair and equitable treatment” to the Spanish group’s investments, violating the Agreement for the Promotion and Reciprocal Protection of Investments signed between Colombia and Spain in 2005.
The final resolution has been precipitated by a technical failure of the National Agency for Legal Defense of the State (ANDJE). The ICSID ad hoc Committee – an independent and temporary body distinct from the tribunal that issued the initial ruling – has now dismissed the annulment request presented by the Colombian Government after verifying that the country did not present a bank guarantee for the total value of the condemnation during the last 30 days of the process. This guarantee was the essential requirement to maintain the provisional suspension of collection. Without this financial backing, the tribunal enabled the company to execute the
Last February, Telefónica completed the sale of its 67.5% stake in Colombia Telecomunicaciones (ColTel) to Millicom, for 214 million dollars (182 million euros). However, the dispute with the Colombian State was excluded from the agreement, so the company chaired by Marc Murtra will receive the payment. Telefónica has declined to comment on the ICSID ruling when questioned by this newspaper.
Origin of the conflict
The origin of the legal conflict dates back to the cellular mobile telephony concession contracts signed in 1994. These documents included clause 33, which established “asset reversion,” a rule that obliged operators to hand over all infrastructure (antennas, networks, and base stations) to the nation at the end of the contract. Although laws from 1998 and 2009 eliminated this obligation to incentivize investment in new technologies, the Comptroller General of the Republic ruled in 2013 that the original clauses should be respected above subsequent laws, as the contracts had been signed earlier.
In July 2017, a national arbitration tribunal based in Bogotá ordered operators ColTel (a Telefónica subsidiary) and Claro (owned by América Móvil) to pay millions for these assets. ColTel, then 67.5% owned by Telefónica and 32.5% by the Colombian State, was ordered to pay 1,652 million Colombian pesos. The Spanish multinational had to carry out a capital increase in its subsidiary to cover approximately 270 million euros at the time corresponding to its stake.
Telefónica initiated international arbitration before ICSID in February 2018, alleging that the Colombian State arbitrarily changed the rules of the game and violated legal certainty. The panel initially ruled in favor of the company at the end of 2024. The tribunal considered that, although the State has regulatory power, the retroactive application of asset reversion constituted a disproportionate measure that affected the value of foreign investment.
The difference in results between foreign operators in Colombia lies in the strength of international treaties. In 2021, ICSID ruled in favor of Colombia in a similar case initiated by Claro, preventing the State from returning 1,286 million dollars (1,209 million euros). The tribunal determined on that occasion that the free trade agreement with Mexico offered fewer guarantees than the bilateral agreement signed with Spain, which provided more robust protection to Telefónica against unforeseen regulatory changes.
Petro’s Rebellion
The fiscal impact of this decision comes at a time of tension between the Executive and international arbitration systems. Colombian President Gustavo Petro has formally proposed Colombia’s withdrawal from ICSID, calling these tribunals bodies that “harm national sovereignty.” According to presidential estimates, the country currently faces legal risks worth 52 trillion Colombian pesos (11,370 million euros) in various international processes. However, legal experts point out that a unilateral withdrawal would not annul ongoing processes or existing treaty commitments, which usually include extended protection clauses for several months after notification of withdrawal.
Colombia’s legal defeat before ICSID sets a precedent on the interpretation of reversion clauses in infrastructure contracts. The decision underscores that compliance with national regulations does not exempt the State from its international obligations under investment protection treaties.
The National Agency for Legal Defense of the State has not issued additional comments on the omission of the bank guarantee that precipitated the loss of the annulment appeal, while the Ministry of Finance must now manage the disbursement of funds in a fiscal year of high pressure for public finances.
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