Brookfield Asset Management Inc. has filed arbitration against Peru, alleging illegal expropriation of toll roads and demanding $2.7 billion in damages. The case reflects a protracted conflict regarding toll collection rights. Lima’s government has countered with its lawsuit, citing corruption issues linked to the former toll road owner, Odebrecht.
Brookfield Asset Management Inc. has initiated arbitration against the government of Peru, claiming illegal expropriation of several toll roads it operates in Lima. This dispute, rooted in the longstanding conflict regarding the Rutas de Lima tolls, has escalated significantly with Brookfield demanding damages of $2.7 billion. The arbitration action is framed under the provisions of the free trade agreement between Peru and Canada.
Brookfield stated, “The announcement today comes after years of arbitrary actions on the part of the city of Lima and other state entities… that have deprived Rutas from its capacity to collect tolls.” Previously, Lima was required to pay $200 million due to prior arbitration and court decisions, yet it has not complied.
The city government expressed regret over Brookfield’s arbitration move, characterizing one toll where payments were halted as “inhuman and harmful” to the residents. In response, the city has filed its own lawsuit in a U.S. federal court, alleging that Brookfield acquired the toll road concession through bribery practices of the previous owner, Odebrecht, a Brazilian corporation notorious for corruption in Latin America. Brookfield has denied any wrongdoing during its tenure.
This arbitration places additional strain on Lima’s Mayor Rafael Lopez Aliaga, who has made it his central pledge to eliminate Brookfield’s toll collections. Aliaga, a conservative who has previously run for president, is reported to be contemplating another candidacy in the upcoming elections.
Brookfield Asset Management’s arbitration against Peru is a significant legal and financial confrontation surrounding toll road operations in Lima. The company alleges unlawful expropriation and is seeking $2.7 billion in damages, while the city contests the validity of the toll concessions. The outcome of this case could have wide-ranging implications for local governance and investment tensions between the two nations, particularly in the wake of corruption allegations associated with the toll road’s previous ownership. Furthermore, this case underscores the challenges faced by foreign investment in regions with complex legal and political landscapes, emphasizing the delicate balance between municipal priorities and commercial engagements.
Original Source: financialpost.com
