HSBC’s director of litigation in Latin America and Mexico says this is the first time the UK-based bank has had to file a lawsuit of this nature.
Britain’s HSBC in July this year launched an international arbitration in the United States against the country of El Salvador for $49 million, arguing that it had been denied justice in a court dispute with IJASAL, whose case began in 2007.
HSBC’s Director of Litigation for Latin America and Mexico, Joaquín Martinez, explained yesterday to El Diario de Hoy that the bank does not collect any private debts from El Salvador, and that the goal in reaching this latter case is to confirm its right to incoming justice. In the Agreement for the Encouragement and Reciprocal Protection of Investments signed by the United Kingdom with the Government of El Salvador in 1999.
“It is not that we are collecting private debts, but rather that we are collecting reparations resulting from the denial of justice granted by the courts of the state of El Salvador,” the executive said.
He also added that by signing this interstate agreement, El Salvador promised to do justice on an equal footing with investors from that country.
“It is the state that has the obligation to provide the administration of justice according to the rules, reliably and in equal conditions for both parties, which has not happened,” Martinez said.
The case that HSBC has taken to international bodies began in 2007 when Ingeniero José Antonio Salaverría y Compañía (IJASAL) entered into a loan agreement with HSBC El Salvador for $2.1 million. IJASAL defaulted and HSBC sued the company to collect the debt, but instead of paying, it confronted the bank for violating the loan agreement and demanded $22.7 million. Finally, the case was escalated to the Civil Chamber, where the judges ruled in favor of Igasal, but unusually decided to pay the $49.3 million, twice what Igasal had demanded.
HSBC sues El Salvador for $49 million in the US.
HSBC appealed to the Constitutional Chamber, but it ruled the case “inadmissible”.
And although the bank sent a notice of this controversy to both the deputy of Bukila, the attorney general and the head of the Supreme Court of Justice, HSBC did not receive any response, so they moved to the international lawsuit as a last resort.
Martinez stated that this is the first time that HSBC has resorted to an international lawsuit against a country. “It is not that HSBC is not satisfied with the judicial decisions of the countries in which it is suing, but that given the extraordinary things that have occurred, we consider that there has been a denial of justice,” he said.
Now with the lawsuit going, the state must appoint its representatives to the International Center for Settlement of Investment Disputes (ICSID, based in Washington) as soon as possible. Based on the experience of other cases, Martinez estimated that this lawsuit will last about three years, during which time the Salvadoran state will have to pay lawyers to defend its position.
When Martinez was asked what his expectations of a favorable decision were, he replied that they were right and that he was therefore confident that the international agreement that El Salvador had signed with the United Kingdom would be fulfilled.
Last week, Finance Committee Chairman Rep. Dania Gonzalez, He reprimanded the president of the Salvadoran Banking Association (Abansa) in a hostile mannerRaúl Cardinal on this international demand and blames the state for not building hospitals if it paid the amount of the demand.
The HSBC representative responded to these statements: “Commission members seem to have forgotten that it is an international treaty, and in an international treaty, it is legislation that applies to the interior of the country and gives rights to a foreign investor to seek protection for their investments.”
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