Rurelec (LON:RUR) chief executive Peter Earl says he is looking forward to a positive outcome from the group’s international arbitration against the Bolivian government in 2012.
Last year the group’s interest in independent power firm Empresa Guaracachi SA was expropriated following its nationalisation by the Bolivian government.
Since then Rurelec has engaged in international arbitration over compensation due to the company under bilateral investment treaties – UK/Bolivia and US/Bolivia.
This morning Rurelec told investors that the arbitral tribunal has been appointed and the arbitral procedure has now been established.
"I am pleased with the progress which we are making towards a resolution of our compensation claims against the Plurinational Government of Bolivia,” Earl said.
“A year on from the expropriation of our Guaracachi shares, Rurelec is a very different company today with a strong balance sheet and cash flow from Argentina and we are well supported by our shareholders.
“We are now at an advanced stage of the arbitration process and look forward to a positive outcome in 2012."
Rurelec said that international law requires the payment of compensation amounting to the full market value of the expropriated investment prior to any threat of expropriation.
As a result Rurelec has now commissioned an independently assessed open market valuation of its holding in Guaracachi prior to such threat. This will be presented to the arbitral tribunal in March 2012. It will also present a detailed statement of claim, supporting documents and witness statements.
The arbitral procedure includes a number of key elements, Rurelec explained.
To provide transparency of the arbitration proceedings the main written pleadings and any final hearing will be accessible to the public.
It will be administered by the internationally recognised Permanent Court of Arbitration in the Hague, Netherlands. It will be governed by the 2010 UNCITRAL Arbitration Rules.
Both the English and Spanish languages will have equal status, Rurelec said.