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Argentina – CAI wins US$36m arbitration case against Argentinian gambling authority

By - 9 November 2021

In its decision of November 5, 2021, an international World Bank arbitration court has awarded Casinos Austria International (CAI) approx. US$36m in its action against the state of Argentina after a five-year battle for compensation.

The trigger for this legal dispute was the withdrawal of the licence for the CAI subsidiary ENJASA by the gambling authority of the province of Salta in August 2013, which was challenged by CAI from the outset. The decision of the arbitration court describes the withdrawal of licences as ‘arbitrary and abusive.’

After failed legal challenges set before Argentina’s local authorities and courts, arbitration specialist, Florian Haugeneder, filed an arbitration lawsuit for CAI under the Bilateral Investment Protection Agreement between the Republic of Austria and Argentina.

The arbitration action was filed with the International Centre for Settlement of Investment Disputes (ICSID) on December 4, 2014. ICSID is an international investment dispute resolution organisation based in Washington, DC, US, which belongs to the World Bank Group.

The procedure under the file number ICSID Case No. ARB/14/32 (“Casinos Austria International and Casinos Austria Aktiengesellschaft v. Argentine Republic”) first included the procedure for clarifying the jurisdiction of the arbitration tribunal, for which the arbitration tribunal ruled in favour of CAI. Based on this, the procedure for deciding on the matter itself followed, which is again successfully concluded in favour of CAI. The decision is legally effective and enforceable.

“It is gratifying that the international arbitration court has agreed with our arguments. It was always clear to us that the withdrawal of licences was a political manoeuvre and an act of arbitrariness by the gambling authority in Salta, conducted without legal basis.”

Bettina Glatz-Kremsner, Director General, Casinos Austria

“It is gratifying that the international arbitration court has agreed with our arguments,” stated Casinos Austria Director General, Bettina Glatz-Kremsner. “It was always clear to us that the withdrawal of licences was a political manoeuvre and an act of arbitrariness by the gambling authority in Salta, conducted without legal basis. Not only have we been proven right, but we are also pleased in regards to the high payment awarded to us, which is of course very positive in these difficult times and will be reflected in our income this year. I would especially like to thank the Managing Director of CAI, Christoph Zurucker-Burda, and his team, who have led this dispute with great commitment over the years,”

Casinos Austria International began operating in Salta in 2006, when the company acquired a majority interest in Leisure & Entertainment (L & E) a company that owned 90 per cent of the shares of gaming company Enjasa. Enjasa was given the exclusive right to run gaming in the province it was privatised in Salta in 1998.

Under a new deal in October 2013 it was agreed that Casinos Austria would own 100 per cent of Leisure and Entertainment SA; Enjasa’s mother company. Casinos Austria agreed to the deal after discussions with the local government of Salta. However, in August 2013 the Minister of Economy, Carlos Parodi announced that the company’s licence would be revoked due to apparent breeches in anti-money laundering standards.

The regulatory gaming body denied the motion for reconsideration filed by ENJASA to continue managing raffles, lotteries, bingos, slot machines and casinos and governor Juan Manuel Urtubey revoked the company’s contract by decree in 2013. Casino Salta was located within the Sheraton Salta and operated with 140 slots and a host of table games.

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