Arbitration United States

Termocandelaria Power Initiates ICSID Arbitration Against Colombia

Published 2026-05-28 1 source Arbitration Bilateral Investment Treaty Colombia Energy Sector ICSID Regulatory Disputes United States

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TL;DR

  • Termocandelaria Power S.A. has filed an arbitration case against Colombia at ICSID.
  • The claim concerns alleged regulatory harms exceeding $198 million.
  • The dispute is based on the Spain-Colombia Bilateral Investment Treaty.
  • The arbitration registration was formalized by ICSID on 27 April 2026.

Overview

Spanish energy company Termocandelaria Power S.A. has initiated arbitration proceedings against Colombia under the ICSID Convention, alleging that regulatory measures adopted by Colombia since 2024 have significantly affected its revenues. The company claims these actions violate the Colombia-Spain Bilateral Investment Treaty (BIT).

What Happened

On 6 April 2026, Termocandelaria Power S.A. submitted a request for arbitration against the Republic of Colombia to the International Centre for Settlement of Investment Disputes (ICSID).

ICSID registered the arbitration case on 27 April 2026.

The dispute arises from regulatory actions taken by Colombia in 2024 that, according to Termocandelaria, reduced revenues due from its subsidiaries Termocandelaria S.A.S. E.S.P. and Termobarranquilla S.A. E.S.P. for energy supplied to Air-e S.A.S. E.S.P., the state electricity distributor.

Termocandelaria argues these measures constitute a breach of the Colombia-Spain BIT, specifically regarding fair and equitable treatment and non-discrimination.

The company estimates its accumulated financial losses at over $198.4 million and maintains that the arbitration seeks to protect its long-term investments in Colombia's energy sector.

The company's legal representation consists of Freshfields and local firm Rincón Castro Abogados. Termocandelaria has stated that the arbitration proceedings will not affect its current operations or workforce in Colombia.

Context

Termocandelaria Power has operated in Colombia's power generation market for over 20 years.

The company highlights the importance of regulatory stability and respect for contracts in capital-intensive sectors like electricity.

According to the source, the arbitration is grounded in provisions of the 2007 Colombia-Spain Bilateral Investment Treaty.

Why It Matters

  • The case highlights continuing tensions over regulatory policy in Colombia's energy sector and the use of international arbitration under investment treaties.
  • The financial stakes, exceeding $198 million, underscore the relevance of regulatory risk for foreign investors operating in essential infrastructure sectors.

Sources

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