In 2001 LaGeo placed an international public bid to choose its Strategic Partner in order to develop geothermal energy in El Salvador, offering as main attraction the eventual control of LaGeo by means of its capitalization of investment.

The public bid was won by ENEL and a Shareholder’s Agreement was signed, which started being executed normally, but when ENEL wanted to capitalize the investments that would allow them to gain control over LaGeo, the governmental agency Comisión Ejecutiva Hidroeléctrica del Río Lempa (“CEL”) and its subsidiary Inversiones Energéticas, S.A. de C.V. (“INE”), as shareholders of LaGeo and subscribers to the aforementioned Agreement, opposed to this, and by this the dispute arose that initiated he arbitration between ENEL and CEL and INE.

With the definitive grant of this arbitration process, the arbitrators have recognized and reconfirmed ENEL’s right to capitalize investments that will allow them to become majority shareholders and gain control of LaGeo, all in accordance to the Shareholders Agreement that was originally signed.  

Your firm’s role on the deal (including which jurisdiction’s law it advised on): 

Arias & Muñoz successfully represented ENEL in this arbitration process, as a plaintiff and as a defendant of the counterclaim promoted by CEL and INE in relation with the breach of the Shares Holder Agreement celebrated between them.

Brief description of why the deal is innovative: 

This is the first international litigation that is resolved in a dispute related to the geothermal energy sector in El Salvador, as well as the right that has been granted to ENEL to capitalize its investments in LaGeo for an amount over US $120 million. This represents an important investment for the country and will contribute to the development of such industry.

Enel Green Power is the company with which ENEL Group works in the development and generation of energy through renewable resources. It has presence in Europe, North, Central and South America and is a leader in this sector thanks to its 22 million kph generated by water, sun, wind and geothermy and that satisfy the energy needs of more than 8 million homes.

Other parties involved in the deal:

From Chadbourne & Parke, Partners Ignacio Suárez Anzorena, Luis E. Graham and Sara Marzal.

From Enel Green Power’s in-house legal team, Edgar Miller and Daniel Muñoz