Hold On Here, Bolivia Tells Euro Telecom

WASHINGTON (CN) - Bolivia claims a former minister of legal affairs exceeded her legal authority when she let a European company take half of the country's nationalized telecommunications network. Bolivia asked D.C. Federal Court to declare the agreement invalid, and to bar the defendant ETI Euro Telecom International from "continuing to prosecute or participate in the ad hoc proceeding" claiming part ownership of the network.

The Plurinational State of Bolivia claims that if allowed to stand, the agreement would cause irreparable harm by offending Bolivia's "critical sovereign interests."

Bolivia has been embroiled in a dispute with ET Euro Telecom since 2007, when the Andean country nationalized the Empresa Nacional de Telecommunications Entel.

At the time, Bolivia and the Netherlands were party to a bilateral investment treaty that held, among other things, that the state would protect foreign investments.

In October 2007, ETI commenced arbitration proceedings against Bolivia under the auspices of the International Centre for the Settlement of Investment Disputes in Washington. After objecting to the panel's jurisdiction - saying that Bolivia had withdrawn from the bilateral treaty before it nationalized the telecom network - Bolivia says agreed to participate under protest, solely to challenge the panel's jurisdiction.

But just before the hearing was to take place, ETI commenced an ad hoc proceeding raising the same material issues, and suggested Bolivia enter into that process as a way of resolving the jurisdictional dispute.

On Oct. 16, 2009, Bolivia's then-Minister of Legal Defense, Maria Cecilia Rocabado Tubert, executed an agreement submitting Bolivia to the ad hoc proceeding. She executed a second agreement in which she waived "certain valuable sovereign rights of the Bolivian State," according to the complaint.

Bolivia says Rocabado exceeded her authority when she entered into the agreements, her power being "strictly circumscribed by the power attorney extended to her by the President of Bolivia."

Further circumscribing her authority, Bolivia said, is its Ministerial Powers Decree, which holds that any agreement involving international arbitration must be approved by the National Council for the Legal Defense of the State and be authorized, by decree, by the Bolivian President.

Bolivia seeks declaratory and injunctive relief to prevent the ad hoc proceeding from going forward.

It is represented by Dennis H. Hranitzky with Dechert LLP in New York, N.Y.

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