Colombia Seeks to Avoid US$379 Million Payment to Telefonica (Movistar). The government of Colombia has launched a legal offensive to annul or suspend that payment, following an adverse ruling by the International Centre for Settlement of Investment Disputes (ICSID).
The tribunal concluded that Colombia breached the obligation to grant fair and equitable treatment to the company’s investments, under the Agreement for the Promotion and Reciprocal Protection of Investments between Spain and Colombia. Annual interest of 5% is added to the principal amount, calculated from Aug. 29, 2017, the date on which a Telefonica subsidiary complied with a previous national award.
Origin of the conflict: the 1994 contracts
To understand this litigation, one must go back to 1994, when the state granted concessions to private operators to provide mobile telephony under a legal framework that included an “asset reversion” clause. This rule stipulated that, upon the expiration of the concession contract, all installed infrastructure — towers, networks, and equipment — would become state property.
In this context, BellSouth began operations in Colombia; in 2004, Telefonica of Spain announced its acquisition of BellSouth’s Latin American operations, a process it consolidated in 2005.
In 1998, the Colombian Congress approved Law 422, which modified the telecommunications regime. Companies and the government of that era interpreted it as eliminating the obligation to revert physical assets, replacing it with spectrum use fees.
However, in 2013, the Constitutional Court clarified that the law did not modify the original contracts from the nineties, and that the reversion obligation remained in force for those agreements.
The 2017 national award and international escalation
In 2016, the Technology Ministry, or MinTIC, initiated arbitration against subsidiaries of Telefonica and America Movil before the Bogota Chamber of Commerce. In 2017, the tribunal ordered the Telefonica subsidiary to pay nearly 1.6 trillion pesos (US$449,89 billion).
The company complied but did so under protest: It argued that the demand constituted an indirect expropriation and violated the fair treatment promised in the bilateral investment agreement with Spain. Having exhausted domestic remedies, Telefonica turned to ICSID in February 2018.
On Nov. 12, 2024, ICSID ruled in favor of Telefonica. Colombia requested the annulment of the award, a remedy that the tribunal admitted on Dec. 6 of that same year.
Colombia seeks to avoid US$379 million payment
The National Agency for the Legal Defense of the State (ANDJE) says that the arbitral tribunal omitted key elements of the Colombian defense, exceeded its powers, and acted as an appellate court by reviewing sentence C-555 of 2013 from the Constitutional Court.
With these arguments, Colombia reaches the final hearing on June 3 and 4, 2026, in Paris, where an ad hoc committee will hear the parties before issuing its decision.
The path there, however, has already presented obstacles. In January 2026, the committee required an international bank guarantee as a condition to maintain the suspension of the payment obligation. Colombia acknowledged that it could not comply and proposed alternative solutions. Without that guarantee, Telefonica can begin the collection process while the annulment remedy continues its course.
ANDJE highlighted that the Telefonica case produces a result “completely contrary” to that of the parallel process initiated by America Movil (Claro), where Colombia managed to avoid a US$1.2 billion penalty despite the underlying facts being similar. That precedent reinforces the Colombian position, although general ICSID precedents indicate that annulment remedies have a narrow margin of success.
This litigation highlights the permanent tension between national legal sovereignty and the commitments acquired in investment protection treaties. What the ad hoc committee decides in Paris in June will determine not only the fate of these US$379.8 million but also the precedent that Colombia sets for future foreign investors in strategic sectors.