Petrobras in Bolivia: Is There a Rule of Law in the ‘Primitive’ World?

Abstract

What might lie behind a heterodox approach to legal disputes arising in the struggle for energy resources? Here, the State parties turn to bargained solutions, instead of reaching for remedies available in contracts and in investment treaties, as suggested by the mainstream literature on rule of law of the investment regime. The First Part of this case-note explores the main regulatory instruments put in place between Brazil and Bolivia in relation to the regulation of hydrocarbons, which include documents as diverse (from a normative perspective) as memorandum of understandings, gentlemen’s agreements, standard treaties, contracts and exchange of diplomatic letters. Part II explores the political momentum in Bolivia that gave rise to a referendum and later the Decree expropriating foreign corporations operating in the country, and introduces the legal remedies available to Brazil and Petrobras. Part III explores the aftermath of the case, describing the new contractual arrangements between Petrobras and YPFB and theorizing on the rule of law format that has employed through public-private negotiated processes. The case is concluded with a word of caution: mainstream explanations of what constitutes winning a case in international law and the legal processes involved therein need to be re-conceptualized to include more holistic approaches and alternative legal formats.