Country Risk

The next president will inherit a docket of Peru arbitration cases that poses a multi-billion-dollar fiscal threat and tests the country’s reputation with foreign investors.

Peru Faces $30 Billion in Arbitration Claims as New President Takes Office (Photo internet reproduction)

A $30 Billion Fiscal Shadow

Peru’s Ministry of Economy and Finance (MEF) calculates that worst-case exposure from investor-state claims at the International Centre for Settlement of Investment Disputes (ICSID) plus arbitration costs reaches roughly $30 billion. That sum equals 9.28% of the country’s 2024 gross domestic product and reflects the combined impact if multiple large claims in mining, energy and infrastructure were decided adversely.

Peru has become the most sued state at ICSID in recent years, with about 20 to 24 pending cases. Many state contracts include clauses that send disputes over $20 million directly to ICSID, magnifying the country’s international legal exposure.

Brookfield’s $2.7 Billion Toll-Road Claim

The single largest pending case was registered on 27 March 2025 by Canada’s Brookfield under the Canada–Peru Free Trade Agreement (FTA). The claim targets measures affecting the Rutas de Lima toll-road concession, including restrictions on toll collection that the investor alleges are expropriatory.

Public statements by the investor indicate damages of approximately $2.7 billion. Even a partial adverse award would create a multi-billion-dollar liability, significant relative to Peru’s annual infrastructure budgets.

Unpaid Awards and Enforcement Actions

Canadian miner Lupaka Gold won a final ICSID award on 30 June 2025 after a tribunal found Peru failed to protect its investment from indigenous community blockades. The tribunal ordered Peru to pay $40.4 million in compensation plus compound interest, and with no annulment request filed, the award became final and binding on 28 October 2025.

By March 2026, enforcement filings in Washington D.C. placed the total owed at about $68.6 million. Lupaka filed an enforcement action in the U.S. District Court for the District of Columbia on 27 February 2026, while Peru had earlier been declared “in default” by a U.S. Bankruptcy Court on 8 April 2025 in a separate enforcement proceeding for the Kuntur Wasi airport award.

Mining Tax and Energy Disputes Add Pressure

Southern Peru Copper Corporation (SMCV) is pursuing a claim under the U.S.–Peru Trade Promotion Agreement and a 1998 Stability Agreement, alleging breaches of tax and royalty stabilisation. The company’s memorial requested damages to “wipe out all consequences” of Peru’s acts, valued at $909 million as of October 2021, with over $1 billion assessed in taxes, penalties and interest.

In the energy sector, Spain’s ENAGÁS won a $176.4 million award in November 2024 over a gas pipeline dispute, while a new case from Blue Water Worldwide over a $60 million electricity tax dispute was registered on 10 February 2026. These add to a pattern of energy-sector claims that may affect perceived risk for foreign utilities and infrastructure funds.

Mixed Signals for Investor Confidence

Peru paid the $91 million Kuntur Wasi airport award in January 2026 and negotiated a settlement with Gramercy Funds in December 2024 that reduced a potential $1.8 billion bond claim to roughly $33 million. These actions are cited by commentators as positive signals that Peru can honour arbitral awards.

However, delays in paying Lupaka and enforcement defaults in U.S. courts risk damaging Peru’s image as a reliable host state. The incoming administration will need to balance prompt payment and settlements against the fiscal cost of a live docket concentrated in extractives and infrastructure, the very sectors that drive Peru’s growth model.

Frequently Asked Questions

What is ICSID and why does it matter for Peru?

ICSID is the International Centre for Settlement of Investment Disputes, a World Bank body that arbitrates disputes between foreign investors and host states. It matters for Peru because the country is currently the most sued state at ICSID, with around 20 to 24 pending cases that carry a worst-case fiscal exposure of roughly $30 billion, according to the Ministry of Economy and Finance.

How much does Peru currently owe from lost arbitration cases?

The largest unpaid award is the Lupaka Gold case, which has grown to about $68.6 million with compound interest as of March 2026. Peru paid the $91 million Kuntur Wasi award in January 2026 and settled the Gramercy bond case for roughly $33 million, but other enforcement actions, such as the Deviandes road concession case for about $85.8 million, are reportedly ongoing in U.S. courts.

Which sectors face the most arbitration risk in Peru?

Among the 24 ongoing ICSID cases, eight involve oil, gas and mining, six target transport infrastructure such as roads, metro and ports, and two concern power and energy. This concentration means arbitration outcomes are closely tied to Peru’s extractive industries and public-investment strategy. Sources include Wolters Kluwer’s arbitration blog, the National Law Review, ITA Law, Daily Jus, and ISDS Bilaterals.