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Dispute over containers in Montevideo Port goes to arbitration

The World Bank’s International Centre for Settlement of Investment Disputes (ICSID) has agreed to arbitrate a case involving the shareholders of the main operator of Uruguay’s Montevideo Port, Montecon, against the state. ICSID is expected to appoint an Arbitration Tribunal to resolve the dispute over the rights to move containers in the port.

Since 2021 Neltume Ports has been protesting the decision by Uruguay’s government to offer the specialized Terminal Cuenca de Plata (TCP) exclusivity in movement of containers. TCP is operated by Montecon’s rival operator, Belgium-based Katoen Natie, which also signed an agreement with the government to invest over $455m in expansion of the terminal. In return, the government issued a decree prioritizing TCP’s terminal to handle container vessels calling at the Montevideo port.

Montecon, which belongs to Neltume Ports consortium, whose shareholders are the Chilean company Ultramar (60%) and the Canadian group ATCO (40%) is arguing that this agreement creates a monopoly of port services, which violates principles of free competition, as recognized by Uruguayan laws.

In its complaint to ICSID, Montecon has alleged further that actions by Uruguay violated the Investment Promotion and Protection treaties, signed between its shareholders and the state. Montecon is seeking damages and restitution of up to $600m.

“In view of the measures ordered by Uruguay and the absence of a dialogue aimed at resolving the situation that affect Montecon, the investors have initiated a conflict resolution mechanism provided for in the Investment and Promotion Treaties entered by Uruguay with Chile and Canada,” said Montecon.

Uruguay President Luis Lacalle Pou defended the investment at TCP, saying it was the largest-ever in the history of Montevideo port. “The case is a matter of businessmen who supposedly see their interests affected and I do not agree with them,” said Lacalle.