ICC Tribunal Fully Endorses Compass Lexecon’s Expert Opinion in Contract Termination Dispute

Dr. Manuel A. Abdala and Julian Delamer were retained by Pluspetrol Norte S.A. (“Pluspetrol Norte”) to provide economic analysis in a commercial contract dispute involving the operation of a crude oil concession in the Peruvian Amazonia. Perupetro alleged that Pluspetrol Norte’s decision to liquidate and terminate the contract was conducted in bad faith to avoid termination obligations, arguing that an aggressive dividend policy drove such a decision.

The ICC Tribunal (“Tribunal”) ruled in favor of Pluspetrol Norte, relying on the testimony of Dr. Abdala, who showed that Pluspetrol Norte’s dividend payout from 1996 to 2013 was reasonable and consistent with standard solvency tests. Further, the Tribunal found the decision to liquidate to be commercially reasonable based on Dr. Abdala’s assessment of the prospective economics of the concession contract, which showed a negative present value of future cash flows due to the combination of lower crude oil prices, the imposition of arbitrary fines by the environment regulator, and the halt in production due to the COVID-19 pandemic.

Dr. Abdala and Julian Delamer were supported by a team led by Federico Gonzalez Loray that included Antonio Crea del Blancoand Luciano Teitelbaum. Compass Lexecon worked closely with Huáscar Ezcurra, Alfredo Bullard, Carlos Ríos, Rodrigo La Rosa, Daniel Masnjak, and Bruno Doig of Bullard Falla Ezcurra +, who represented Pluspetrol Norte, and Ari MacKinnon and Elisa Zavala of Cleary Gottlieb Steen & Hamilton, who represented Pluspetrol Resources Corporation, the parent company of Pluspetrol Norte.