JP Morgan Chase, Dresdner & CSFB v. Republic of Uruguay
Analysis Group academic affiliate Professor Sebastian Edwards recently testified in an international arbitration on behalf of claimants Chemical Overseas Holdings, Inc. (a subsidiary of JP Morgan Chase), Dresdner Bank Lateinamerika AG, and Credit Suisse First Boston. The arbitration involved the failure by the Republic of Uruguay (RoU) to maintain the solvency of Banco Comercial, Uruguay's largest private bank, and thereafter the RoU's failure to purchase the claimants' investment in the bank. The claimants alleged that the RoU was contractually obligated to maintain the solvency of Banco Comercial and if it failed to do so, the claimants had a right to sell back their investment in the bank to the RoU for the agreed-upon price of $100 million. Following the devaluation of its currency and a run on the banking system, the RoU closed Banco Comercial, transferred its performing assets to a new, state-run bank, and claimed that the claimants' investment was worthless.
An Analysis Group case team, led by Managing Principals Nicholas Crew and Samuel Weglein, provided support for Professor Edwards, a noted expert in exchange rate policy as well as the economies of Latin America. Professor Edwards testified in the arbitration on the nature of Uruguay's economic crisis and its subsequent recovery following the devaluation of its currency. Following almost two weeks of evidentiary hearings, the ICC International Court of Arbitration awarded the claimants $100 million in damages plus 9 percent interest and all legal fees and expenses.