Quadrant’s Damages Expert Testifies in Uruguayan Mining Arbitration

Quadrant’s damages expert, Dr. Flores, was retained by the Oriental Republic of Uruguay (“Respondent”) as quantum expert in the arbitration initiated by Ritika Mehta, Vinita Agarwal, and Prenay Agarwal (“Claimants”) under the 1991 United Kingdom-Uruguay Bilateral Investment Treaty and the UNCITRAL rules (PCA Case No. 2018-04).  The Claimants alleged that Uruguay implemented a series of regulatory changes which ultimately led to the “Valentines” iron ore mining project never being developed.

Valentines was an undeveloped greenfield project that required large-scale capital investments estimated to be several billion dollars to develop the mine site and the necessary infrastructure which included a slurry pipeline and a deep-water port.  The project was first proposed in 2008 when Minera Aratiri was granted initial exploration permits.  This was a time that coincided with peak prices in the iron ore market, which attracted more interest in high-cost capital-intensive projects like Valentines – projects that were previously deemed inviable during the periods of lower market prices.   Claimants sought damages of approximately US$ 4 billion using the Discounted Cash Flow (“DCF”) method.

In his written and oral testimony, Dr. Flores addressed the market dynamics in the iron ore industry and opined on the fair market value (“FMV”) of the Valentines project as of the valuation date.  Dr. Flores relied on the DCF method, trading multiples, investment costs, and implied valuations from funding arrangements methods to assess the FMV of the Valentines project.

The Tribunal (President: Dr. Andrés Rigo Sureda; Co-arbitrators: Mr. Thomas Johnson and Prof. Pierre Mayer) dismissed the claims against Uruguay on the grounds that the Claimants were not owners of the Valentines project, but discretionary beneficiaries of a trust that held shares in the parent company which did not have UK nationality and thus, did not have standing to invoke the protections of the investment treaty.  This Award was annulled by a French court in March 2023 and the matter remains ongoing.  

Respondent was represented by Foley Hoag LLP.  Dr. Flores was supported by a Quadrant team that included Jordan Heim, Brendan Moore, Dario Gatti, and Ettore Comi.

Source: UNCTAD