Dispute Over Containers in Uruguay’s Montevideo Port Goes to Arbitration

Uruguay Montevideo
A dispute over container handling at Uruguay’s Montevideo port is going into arbitration (Montecon)

Published May 31, 2024 9:27 AM by The Maritime Executive

The World Bank’s International Center for Settlement of Investment Disputes (ICSID) has agreed to arbitrate a case involving the shareholders of the main operator of Uruguay’s Montevideo Port, Montecon, against the state. The ICSID is expected to appoint an Arbitration Tribunal to resolve the dispute over the rights to move containers in the port.

Since 2021, Neltume Ports has been protesting the decision by Uruguay’s government to offer the specialized Terminal Cuenca de Plata (TCP) exclusivity in movement of containers. TCP is operated by Montecon’s rival operator, the Belgium based Katoen Natie, which also signed an agreement with the government to invest over $455 million in expansion of the terminal. In return, the government issued a decree prioritizing TCP’s terminal to handle container vessels calling at the Montevideo port.

Montecon, which belongs to Neltume Ports consortium, whose shareholders are the Chilean company Ultramar (60 percent) and the Canadian group ATCO (40 percent) argues that this agreement creates a monopoly of port services, which violates principles of free competition, recognized by Uruguayan laws. In its complaint to ICSID, Montecon further alleges that actions by Uruguay violates the Investment Promotion and Protection treaties, signed between its shareholders and the state. Montecon is seeking damages and losses worth up to $600 million.

“In view of the measures ordered by Uruguay and the absence of a dialogue aimed at resolving the situation that affect Montecon, the investors have initiated conflict resolution mechanism provided for in the Investment and Promotion Treaties entered by Uruguay with Chile and Canada,” said Montecon.

Commenting about the case earlier this week, the president of Uruguay Luis Lacalle Pou defended the investment at TCP, saying it is the largest ever in the history of Montevideo port. 

“I will watch over the national interest so that there will be investments and more work at the port. The case is a matter of businessmen who supposedly see their interests affected and I do not agree with them,” said Lacalle.

The 2021 agreement between Katoen Natie and Uruguay will see the operator expand TCP, including construction of a second container yard covering approximately 22 hectares as well as a second quay wall of 700 meters in length. The expansion will increase TCP’s handling capacity to 2.5 million TEUs annually. 

In addition, Katoen Natie concession at the port, which began in 2001 for 30 years, was extended for a further 50 years until 2081.