Brookfield’s $2.7 Billion Arbitration Case Against Peru: A Deep Dive

Brookfield Asset Management launched international arbitration proceedings against Peru on March 12, seeking $2.7 billion in damages. The Canadian investment firm filed its claim with the International Centre for Settlement of Investment Disputes under the Canada-Peru Free Trade Agreement.

Brookfield alleges Peru illegally expropriated toll roads operated by Rutas de Lima, a company it controls. The dispute centers around toll booths in Lima that serve as key transportation arteries for the capital city’s 10 million residents.

Ben Vaughan, Global COO of Brookfield’s Infrastructure Group, expressed frustration with Peru’s actions. “Our confidence has been broken,” Vaughan stated. “The Peruvian state has taken our investment against the rule of law and legal security.”

The conflict stems from actions by Lima’s municipal government and the Constitutional Tribunal. These entities prevented Rutas de Lima from collecting tolls on portions of its 115-kilometer concession network.

The tribunal specifically ordered toll collection suspended in the Puente Piedra district until an alternative route exists. Lima Mayor Rafael Lopez Aliaga has publicly fought against the toll collections.

He promised to cancel them during his administration, calling them unfair to poorer neighborhoods. “Why aren’t toll booths set up in wealthy areas?” Lopez Aliaga questioned publicly.

Legal Battle with the Municipality of Lima

Brookfield acquired its 57% stake in Rutas de Lima from Brazilian construction giant Odebrecht in June 2016. This transaction occurred six months before Odebrecht entered a $3.5 billion plea agreement with U.S. authorities for widespread corruption.

The Municipality of Lima has countered with legal action in U.S. federal courts. Their lawsuit claims Odebrecht obtained the concession through bribery before Brookfield purchased the asset. Lima officials describe Brookfield as “a partner of the corrupt Odebrecht.”

Brookfield maintains two international tribunals already ordered Lima to pay over $200 million in prior cases. The company claims these payments remain outstanding despite court orders.

The concession contract originated in 2013 with a 30-year operating period. It includes maintenance and expansion of existing roads plus construction of new segments. The arbitration represents one of the largest claims against Peru in recent years.

Peru currently faces 39 international investment disputes administered by ICSID. Of these cases, 21 have concluded while 18 remain pending.