Foley Hoag Wins Key Victory for Government of Bolivia in Investor Dispute over Nationalization...

Foley Hoag Wins Key Victory for Government of Bolivia in Investor Dispute over
Nationalization of Telephone Company Entel
New York federal judge rules that investors opposed to nationalization cannot
sidestep arbitral procedures and pressure a sovereign government by attaching
company's assets; case has implications for other state-investor disputes over
nationalization of corporate assets

NEW YORK and WASHINGTON, Aug. 1 /PRNewswire/ -- Foley Hoag LLP secured a
critical victory for the government of Bolivia when a federal judge held that
foreign investors in a recently nationalized company had improperly attached
the company's U.S. assets, and issued an order dissolving the attachment. The
decision could have major implications in other state-investor disputes in
Latin America and elsewhere tied to nationalization of corporate assets.
Judge Laura Swain of the Southern District of New York ruled this week
that European investors in Bolivia's national telephone company Entel, whose
shares were nationalized by Bolivia on May 1, had no right to seize any of
Bolivia's or the company's assets in U.S. banks. As a result of her decision,
full access to the funds will be restored to Bolivia and Entel.
The European concern, ETI, a Dutch subsidiary of an Italian firm itself
owned by Telecom Italia, had filed for arbitration against Bolivia with the
International Centre for the Settlement of Investment Disputes (ICSID), the
arbitration arm of the World Bank, protesting the nationalization of its
shares in Entel and demanding compensation of more than $500 million. On May
5, four days after the nationalization decree was issued by Bolivian President
Evo Morales, the investor group appeared ex parte in courts in New York and
London and convinced judges in both jurisdictions to attach bank accounts of
Entel totaling more than $90 million, as security to guarantee payment of the
arbitral award they are seeking.
Judge Swain ruled that ETI had no right to attach Bolivia's or Entel's
assets prior to the final outcome of what is expected to be a lengthy
arbitration process. Accordingly, she dissolved an ex parte order of
attachment issued by a different judge on May 5. On July 11, a similar order
was issued by the High Court in London, ending the attachment of Bolivia's and
Entel's funds in British banks. With Judge Swain's ruling, all of the formerly
attached funds are now available to the Bolivians.
The Bolivian Ambassador to the U.S., Gustavo Guzman, said, "The recent
decision by a federal judge of the Southern District of New York, which has
put a final end to the attachments of the bank accounts of the Bolivian
telecommunications company Entel -- attachments sought by the Italian company
Euro Telecom International, ETI -- manifests an unquestionable legal support
for the firm conviction of Bolivia to determine the management and
administration of a strategic sector of its economy according to the
principles of sovereignty, self-determination, and fairness and respect for
foreign investments."
Paul S. Reichler, a partner in Foley Hoag'sWashington, DC, office, was
lead counsel in the case on behalf of Bolivia. "Judge Swain's ruling
establishes a very clear precedent for sovereign nations pursuing a policy of
nationalization, as well as for investors who may seek to challenge the
execution of that policy," said Mr. Reichler, who specializes in representing
nations before judicial and arbitral bodies around the world.
"Her decision prevents foreign investors from going outside the arbitral
process to obtain an unfair advantage by freezing bank accounts, as well as
from putting undue pressure on sovereign states to compel settlements on terms
dictated by the investors," he added.
Mr. Reichler argued for dissolution of the attachments on grounds that the
attachment of sovereign funds prior to issuance of a final judgment or
arbitral award is prohibited by the U.S. Foreign Sovereign Immunities Act.
Bolivia's lawyers also argued that since Entel is not a party to the
arbitration between Bolivia and ETI its funds could not be attached to secure
a possible future award against Bolivia. In addition, Mr. Reichler's group
submitted that ICSID arbitration rules prohibit the parties from seeking
relief in national courts prior to the conclusion of the arbitration
proceedings.
In her decision in favor of Bolivia and Entel, Judge Swain wrote, "ETI has
brought an arbitration action against Bolivia, not Entel, and the attached
bank accounts in New York undisputedly belong to Entel, not Bolivia. Plaintiff
has made no proffer ... as to how the monies in Entel's New York bank accounts
constitute an attachable debt obligation of Entel to Bolivia. The order of
attachment will therefore be vacated."
Working alongside Mr. Reichler on behalf of the Bolivian government were
Foley Hoag partners Janis Brennan and Lawrence Martin, both of the Washington,
D.C. office.
Entel was represented by Michael Krinsky, a partner with Rabinowitz,
Boudin, Standard, Krinsky & Lieberman, PC, of New York. ETI was represented by
Robert Sills, a partner with Orrick Herrington & Sutcliffe LLP's New York
office.
The case is E.T.I. Euro Telecom International N.V. v. Republic of
Bolivia, and Empresa Nacional de Telecommunicaciones Entel S.A., No. 08 Civ.
4247 (LTS) (FM).
Complete text of Judge Swain's ruling issued July 30 is available on
request.
About Foley Hoag
Foley Hoag LLP is a leading law firm in international law, litigation, and
arbitration of disputes among sovereign states and between sovereign states
and foreign investors. Foley Hoag also represents foreign governments in
litigation before the federal and state courts of the United States. The
firm's 250 lawyers are located in Washington, DC, and Boston. For more
information visit www.foleyhoag.com.
Contact: James Bourne (212-262-7470) or Allan Ripp (212-262-7477)
jimbournenyc@aol.com
Meghan Gross (617-832-7112) mgross@foleyhoag.com

SOURCE Foley Hoag LLP

James Bourne, +1-212-262-7470, jimbournenyc@aol.com, or Allan Ripp,
+1-212-262-7477, or Meghan Gross, +1-617-832-7112, mgross@foleyhoag.com, all
for Foley Hoag LLP