Azurix
Encyclopedia
Azurix Corp. is a water services company, headquartered in Houston, Texas. The company owned and operated facilities in North America
(mainly Canada
), Europe
, and South America
. In 2007, Azurix was awarded a $165 million claim against the government of Argentina
by an international arbitrator, the company is currently involved in a dispute over Argentina's refusal to pay the claim.
in 1998. In June 1999 it was part-floated on the NYSE stock exchange, with Enron
retaining 34% ownership. The company was formed with an IPO of $800 million and an opening stock price of $22.00, which fell to $2.00 within two years. The business was a disaster for Enron, and in April 2001 Enron announced it would break up Azurix and sell its assets. Enron eventually sold Azurix North America and Azurix Industrial Operations to American Water Works for $141.5 million.
until her resignation in 2000; upon her resignation, John L. Garrison became Chairman and CEO. As of 2006, Rodrigo Castillo serves as the company's President.
, where in June 1999 it bid $438m to win a 30-year concession
covering two of the three regions of the Buenos Aires Province (excluding the Buenos Aires city concession, which is run by Suez). In October 2001, Azurix announced it would withdraw from the contract as of January 2002, accusing the regional government of "serious breaches", and later filed a compensation claim with the ICSID
("Azurix Corp. v. Argentine Republic (Case No. ARB/01/12)"). The concession was terminated in March 2002; in 2007 the ICSID awarded Azurix $156m in compensation (substantially less than the $620m Azurix originally invested and subsequently claimed in damages). On September 2009, the ICSID Ad Hoc Annulment Committee affirmed the award, rendering the arbitration final.
Argentina has not complied with the ICSID ruling and is in violation of US trade law, which states that an arbitration award issued by an ICSID tribunal is “final and binding on the parties, and each party must carry out the provisions of any award without delay (article VII, section 6).” .
Azurix maintains a second arbitration case for its prior investment in the Province of Mendoza, Argentina which was suspended as of August 3, 2010.
As a result of Argentina’s refusal to pay the Award, in December 2009 Azurix filed a petition with the Office of the United States Trade Representative (USTR) to review Argentina’s eligibility to participate in the US Generalized System of Preferences (GSP) program. In the context of the 2009 review of the GSP program, USTR accepted Azurix’s petition to review whether Argentina met the criteria related to enforcement of arbitral awards.
In August 2010, the Office of the United States Trade Representative (USTR) announced it would hear Azurix’s petition regarding Argentina, in connection with the 2009 GSP Annual Review to modify the GSP status of certain beneficiary developing countries (BDC’s) because of country practices.
In a filing prepared in advance of a September 28, 2010 GSP Subcommittee hearing Azurix stated, "Argentina has refused to enforce, through voluntary payment, a final and substantial arbitral award in favor of Azurix. Under these circumstances, U.S. law dictates the removal of GSP benefits for Argentina."
At the September 28, 2010 GSP Subcommittee hearing, Azurix formally called for the removal of Argentina's benefits under the generalised system of preferences (GSP)
.
In oral testimony, attorneys for Azurix, told the subcommittee that Argentina's refusal to comply with the 2006 ICSID award - which was upheld by an annulment committee last September - undermines the "very integrity of the foreign investment legal regime" and has an "erosive effect" on the ICSID Convention.
As of July 31, 2010 Azurix was owed more than $220 million by the Republic of Argentina.
in July 1998 with an all cash purchase of $2.4 billion. This formed the core of Azurix and its main asset. Wessex was one of the most profitable utility companies operating in the UK, earning $232 million profit on $436 million in revenues the year before its sale to Enron. However, the British regulators required the company to cut its rates by 12% starting in April 2000 and an upgrade was required of the utilities aging infrastructure, estimated at costing over a billion dollars. By the end of 2000 Azurix had an operating profit of $100 million and $2 billion in debt. Azurix subsequently sold its interest in Wessex Water in May 2002 to YTL Power.
, Ghana
Azurix created Waterdesk.com, an online eBusiness website that provides transactions online for the water industry in Europe. The weather was featured for the United States
within these portals was done by Freese-Notis Weather
with a series of maps outlining conditions for users. Additional news feeds were provided with a series of headline news sections by Comtex
news services.
Exchange users were to utilize accounts online for the exchanging of water rights contracts as financial instruments. Additionally, the intent was also to provide risk management
for water contract buyers and sellers. This area represented an expansion of EnronOnline to the water business. Some companies in the energy business also rely on water contracts for operations.
Azurix also created Water2Water.com for Latin American businesses to do business with Azurix online. Right before Rebecca Mark's
departure, a pilot program in the Lower Rio Grande was commenced.
North America
North America is a continent wholly within the Northern Hemisphere and almost wholly within the Western Hemisphere. It is also considered a northern subcontinent of the Americas...
(mainly Canada
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...
), Europe
Europe
Europe is, by convention, one of the world's seven continents. Comprising the westernmost peninsula of Eurasia, Europe is generally 'divided' from Asia to its east by the watershed divides of the Ural and Caucasus Mountains, the Ural River, the Caspian and Black Seas, and the waterways connecting...
, and South America
South America
South America is a continent situated in the Western Hemisphere, mostly in the Southern Hemisphere, with a relatively small portion in the Northern Hemisphere. The continent is also considered a subcontinent of the Americas. It is bordered on the west by the Pacific Ocean and on the north and east...
. In 2007, Azurix was awarded a $165 million claim against the government of Argentina
Argentina
Argentina , officially the Argentine Republic , is the second largest country in South America by land area, after Brazil. It is constituted as a federation of 23 provinces and an autonomous city, Buenos Aires...
by an international arbitrator, the company is currently involved in a dispute over Argentina's refusal to pay the claim.
Background
Azurix was formed when Enron Corporation purchased Wessex WaterWessex Water
Wessex Water Services Limited, known as Wessex Water, is a water supply and sewerage utility company serving an area of the south west of England, covering 10,000 square kilometres including Dorset, Somerset, Bristol, most of Wiltshire and parts of Gloucestershire and Hampshire...
in 1998. In June 1999 it was part-floated on the NYSE stock exchange, with Enron
Enron
Enron Corporation was an American energy, commodities, and services company based in Houston, Texas. Before its bankruptcy on December 2, 2001, Enron employed approximately 22,000 staff and was one of the world's leading electricity, natural gas, communications, and pulp and paper companies, with...
retaining 34% ownership. The company was formed with an IPO of $800 million and an opening stock price of $22.00, which fell to $2.00 within two years. The business was a disaster for Enron, and in April 2001 Enron announced it would break up Azurix and sell its assets. Enron eventually sold Azurix North America and Azurix Industrial Operations to American Water Works for $141.5 million.
Leadership
The company was run by Rebecca P. MarkRebecca Mark-Jusbasche
Rebecca P. Mark-Jusbasche was famous as the head of the Enron International division of Enron. She later was promoted to Vice-Chairman of Enron, and resigned from the company in 2000 following the failure of a major investment.-Early life:Rebecca Sue Pulliam was born in Kirksville, Missouri, and...
until her resignation in 2000; upon her resignation, John L. Garrison became Chairman and CEO. As of 2006, Rodrigo Castillo serves as the company's President.
Azurix in Argentina
Azurix is known in particular for operating in ArgentinaArgentina
Argentina , officially the Argentine Republic , is the second largest country in South America by land area, after Brazil. It is constituted as a federation of 23 provinces and an autonomous city, Buenos Aires...
, where in June 1999 it bid $438m to win a 30-year concession
Concession (contract)
A concession is a business operated under a contract or license associated with a degree of exclusivity in business within a certain geographical area. For example, sports arenas or public parks may have concession stands. Many department stores contain numerous concessions operated by other...
covering two of the three regions of the Buenos Aires Province (excluding the Buenos Aires city concession, which is run by Suez). In October 2001, Azurix announced it would withdraw from the contract as of January 2002, accusing the regional government of "serious breaches", and later filed a compensation claim with the ICSID
ICSID
ICSID may refer to:* International Centre for Settlement of Investment Disputes* International Council of Societies of Industrial Design...
("Azurix Corp. v. Argentine Republic (Case No. ARB/01/12)"). The concession was terminated in March 2002; in 2007 the ICSID awarded Azurix $156m in compensation (substantially less than the $620m Azurix originally invested and subsequently claimed in damages). On September 2009, the ICSID Ad Hoc Annulment Committee affirmed the award, rendering the arbitration final.
Argentina has not complied with the ICSID ruling and is in violation of US trade law, which states that an arbitration award issued by an ICSID tribunal is “final and binding on the parties, and each party must carry out the provisions of any award without delay (article VII, section 6).” .
Azurix maintains a second arbitration case for its prior investment in the Province of Mendoza, Argentina which was suspended as of August 3, 2010.
As a result of Argentina’s refusal to pay the Award, in December 2009 Azurix filed a petition with the Office of the United States Trade Representative (USTR) to review Argentina’s eligibility to participate in the US Generalized System of Preferences (GSP) program. In the context of the 2009 review of the GSP program, USTR accepted Azurix’s petition to review whether Argentina met the criteria related to enforcement of arbitral awards.
In August 2010, the Office of the United States Trade Representative (USTR) announced it would hear Azurix’s petition regarding Argentina, in connection with the 2009 GSP Annual Review to modify the GSP status of certain beneficiary developing countries (BDC’s) because of country practices.
In a filing prepared in advance of a September 28, 2010 GSP Subcommittee hearing Azurix stated, "Argentina has refused to enforce, through voluntary payment, a final and substantial arbitral award in favor of Azurix. Under these circumstances, U.S. law dictates the removal of GSP benefits for Argentina."
At the September 28, 2010 GSP Subcommittee hearing, Azurix formally called for the removal of Argentina's benefits under the generalised system of preferences (GSP)
.
In oral testimony, attorneys for Azurix, told the subcommittee that Argentina's refusal to comply with the 2006 ICSID award - which was upheld by an annulment committee last September - undermines the "very integrity of the foreign investment legal regime" and has an "erosive effect" on the ICSID Convention.
As of July 31, 2010 Azurix was owed more than $220 million by the Republic of Argentina.
Wessex acquisition
Enron acquired the British water utility Wessex WaterWessex Water
Wessex Water Services Limited, known as Wessex Water, is a water supply and sewerage utility company serving an area of the south west of England, covering 10,000 square kilometres including Dorset, Somerset, Bristol, most of Wiltshire and parts of Gloucestershire and Hampshire...
in July 1998 with an all cash purchase of $2.4 billion. This formed the core of Azurix and its main asset. Wessex was one of the most profitable utility companies operating in the UK, earning $232 million profit on $436 million in revenues the year before its sale to Enron. However, the British regulators required the company to cut its rates by 12% starting in April 2000 and an upgrade was required of the utilities aging infrastructure, estimated at costing over a billion dollars. By the end of 2000 Azurix had an operating profit of $100 million and $2 billion in debt. Azurix subsequently sold its interest in Wessex Water in May 2002 to YTL Power.
Other business
Between 1999 and 2002, Azurix owned and operated a 30 year water and wastewater concession in Cancun, Mexico. In addition, Azurix took ownership positions in several joint ventures in Mexico and, in April 2000 Azurix won a BOT contract in AccraAccra
Accra is the capital and largest city of Ghana, with an urban population of 1,658,937 according to the 2000 census. Accra is also the capital of the Greater Accra Region and of the Accra Metropolitan District, with which it is coterminous...
, Ghana
Ghana
Ghana , officially the Republic of Ghana, is a country located in West Africa. It is bordered by Côte d'Ivoire to the west, Burkina Faso to the north, Togo to the east, and the Gulf of Guinea to the south...
Azurix created Waterdesk.com, an online eBusiness website that provides transactions online for the water industry in Europe. The weather was featured for the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
within these portals was done by Freese-Notis Weather
Freese-Notis
The Freese-Notis Weather company, commonly known as Freese-Notis, is currently a world leading weather forecasting corporation and is known worldwide for its mid-range and long range weather forecasts...
with a series of maps outlining conditions for users. Additional news feeds were provided with a series of headline news sections by Comtex
Comtex
Comtex News Network, Inc. is a distributor of news on the Internet, specializing in the business and financial market sectors. The company is a wholesaler of electronic real-time news and content gathered from thousands of sources, including national and international news bureaus, agencies and...
news services.
Exchange users were to utilize accounts online for the exchanging of water rights contracts as financial instruments. Additionally, the intent was also to provide risk management
Risk management
Risk management is the identification, assessment, and prioritization of risks followed by coordinated and economical application of resources to minimize, monitor, and control the probability and/or impact of unfortunate events or to maximize the realization of opportunities...
for water contract buyers and sellers. This area represented an expansion of EnronOnline to the water business. Some companies in the energy business also rely on water contracts for operations.
Azurix also created Water2Water.com for Latin American businesses to do business with Azurix online. Right before Rebecca Mark's
Rebecca Mark-Jusbasche
Rebecca P. Mark-Jusbasche was famous as the head of the Enron International division of Enron. She later was promoted to Vice-Chairman of Enron, and resigned from the company in 2000 following the failure of a major investment.-Early life:Rebecca Sue Pulliam was born in Kirksville, Missouri, and...
departure, a pilot program in the Lower Rio Grande was commenced.
External links
- Emanuele Lobina and David Hall (2003), "Problems with private water concessions: a review of experience", PSIRU, University of GreenwichUniversity of GreenwichThe University of Greenwich is a British university located in the London Borough of Greenwich, London, England. The main campus is located on the grounds of the Old Royal Naval College, a central location within the Maritime Greenwich UNESCO World Heritage Site.-History:The history of the...
, June 2003 - ICSID Decision on Jurisdiction, Azurix v Argentina (PDF), December 2003
- Michael Casey, Dow Jones Newswires, 18 July 2006, "Azurix Wins $165 Million Vs Argentina In Latest ICSID Ruling"
- Tom Toulson (September 29, 2010), "Azurix Calls for Action Against Recalcitrant Argentina", Global Arbitration Review
- BNA Daily Report for Executives "Firms Bring Argentina's GSP Eligibility Into Question Over Payment Through Courts"