The news that Argentina´s Government of Cristina Kirchner has recently expropriated the 51% of YPF, an Argentine subsidiary owned by the Spanish Oil company REPSOL, has spread around the whole world during the last few weeks.

The price for the expropriation has not been fixed yet. Article 5 of the APRI Promotion Foreign Investments Agreement signed between Spain and Argentina on 1991 says that, in case any of these countries expropriates any asset or business of any other for fair and lawful causes, an “adequate compensation” must be paid without delay and that all the controversies will be submitted to the International Centre for Settlement of Investment Disputes (article 10).

REPSOL values its YPF shares at USD 10,5 millions, whereas Argentina´s Government argues that they are not compelled to pay any price (or a reduced price, at the most) due to the constant infringements of the Spanish company in Argentina.

At this point, the only way REPSOL has is to ask for a fair compensation through an international arbitration proceeding before the International Centre for Settlement of Investment Disputes (ICSID) (

ICSID is an autonomous international institution created in 1956 per initiative of the World Bank (WB) ( It was established under the Convention on the Settlement of Investment Disputes between States and Nationals of Other States. The ICSID Convention entered into force on October 14, 1966. To date, it has been signed by 157 States and ratified by 147 States, including Argentina.

The Convention sets forth ICSID’s mandate, organization and core functions. The primary purpose of ICSID is to provide facilities for conciliation and arbitration of international investment disputes.

The main characteristic of these proceedings is the independence regarding the local laws of the sued States, members of the Convention.

In this scenario, REPSOL might have a chance to get reimbursed a fair price for its shares. But in this concrete case, apart from the fair and lawful causes Argentina might argue (if any), it must be pointed out that Argentina is the country who has been most sued before the ICSID, and also that Argentina has already expressed its objections regarding the interpretation of the States’ responsibility in actions against the country, and is reluctant to obey the ICSID resolutions.

Álvaro Marco
Partner Adarve / Associate Professor UCLM University