Identifier
Created
Classification
Origin
05SANTODOMINGO4778
2005-10-26 13:54:00
UNCLASSIFIED
Embassy Santo Domingo
Cable title:  

DOMINICAN REPUBLIC: EL PASO SETTLES DISPUTE WITH

Tags:  DR EFIN ENRG EINV BEXP 
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UNCLAS SANTO DOMINGO 004778 

SIPDIS

DEPT FOR EB/IFD/OIA, JAMES ROSELLI, WHA/EPSC EDUARDO
MARTINEZ, EB/CBA, WHA/CAR; DEPT PASS USAID

E.O. 12958: N/A
TAGS: DR EFIN ENRG EINV BEXP
SUBJECT: DOMINICAN REPUBLIC: EL PASO SETTLES DISPUTE WITH
CARIB CONSULT

UNCLAS SANTO DOMINGO 004778

SIPDIS

DEPT FOR EB/IFD/OIA, JAMES ROSELLI, WHA/EPSC EDUARDO
MARTINEZ, EB/CBA, WHA/CAR; DEPT PASS USAID

E.O. 12958: N/A
TAGS: DR EFIN ENRG EINV BEXP
SUBJECT: DOMINICAN REPUBLIC: EL PASO SETTLES DISPUTE WITH
CARIB CONSULT


1. U.S. firm El Paso International recently resolved the
dispute in which Dominican firm Carib Consult was petitioning
the Dominican Supreme Court to ignore international
arbitration rulings and to uphold a lower court judgement
against El Paso. The Embassy has been actively involved in
the case since it began in 1995. Jorge Alvarez, director of
Global Power Central America and Caribbean of El Paso
International wrote to the Ambassador on October 14 to
express thanks for Embassy involvement.


2. The lawsuit began as a dispute between Coastal Technology
Dominicana, S.A (Coastal, a subsidiary of El Paso
Internationl) and NICOR International Corporation (NICOR),
which had provided consulting services judged by Coastal to
be inadequate. Dominican firm Consultores de la Cuenca del
Carib, S.A. (Carib Consult) subsequently acquired the rights
of NICOR and vigorously pursued them in Dominican courts,
alleging a contract violation by Coastal.


3. At issue was performance under a two-year contract signed
in 1993 concerning collaboration on energy projects in the
Dominican Republic. This agreement provided that any dispute
between the two would be resolved via the International Court
of Arbitration (ICC). In 1995, after the contract ended,
Coastal brought 48 percent of the shares of the Compania de
Electricidad de Puerto Plata (CEPP),the main supplier of
electricity in the Puerta Plata region of the Dominican
Republic. Carib Consults claims this purchase was a
violation of contract and sued for damages. Plaintiffs
originally sought USD$11 million in damages, a sum that rose
over time to USD$42 million. In 2001 a neutral arbitrator
from the ICC issued a "final award," finding that Coastal had
not broken the terms of the contract and was not liable for
any damages. The Dominican Republic aceded to the New York
Convention on Arbitration and Mediation after this date.
Carib Consult pursued the case in the Dominican court system
and obtained favorable rulings in the lower courts. In 2004
at the request of Carib Consult a judge placed a lien against
El Paso assets, blocking bank accounts holding about USD$5
million dollars. El Paso's attorneys appealed to the
Dominican Supreme Court. The court has not yet considered
the appeal, and with the reported settlement, it probably
will not do so.


4. In 2004 Embassy officers demarched the Foreign Ministry
concerning the implications of the case, stressing the
potential contradictory message that would be posed for
investors if the Supreme Court did not take into account the
country's obligations under the New York Convention. The
Ambassador visited the CEPP plant in 2005 and spoke in favor
of El Paso's interpretation of the contracts.


5. El Paso representatives were not at liberty to provide
details of the settlement but they assured Embassy officer
that the lien on El Paso assets has been lifted.
KUBISKE