By Adrian Cruz

Law360 (April 13, 2020, 5:43 PM EDT) -- In its latest bid to block the enforcement of a $35 million arbitration award, Guatemala told the D.C. Circuit that having to pay the award would economically harm the country as it deals with the coronavirus pandemic.

Guatemala on Friday said enforcement of the award issued by the International Centre for Settlement of Investment Disputes in favor of U.S.-based Teco Guatemala Holdings LLC would do more damage than usual as the country struggles to cope with the health and financial impacts of COVID-19.

Teco Guatemala, which had invested in a local electricity company in Guatemala called Empresa Electrica de Guatemala SA, won the original award for $21.1 million, plus interest, from a tribunal in December 2013 that determined Guatemala was liable for Teco Guatemala's losses for the period before it sold its interest in the electric company.

"Requiring the republic to pay right now would affect significantly its congressional-ordered budget that is predetermined to fulfill its obligations, such as public food services, health, safety, infrastructure, communications, the administration of justice, among others," Guatemala said in the motion.

According to a Sunday report by Guatemala's president, the Central American nation had 153 people diagnosed with coronavirus and three deaths from the disease. Last month, Guatemala attempted to block deportation flights from the United States, citing the potential risk of bringing the disease over, but days after announcing it, the country reversed course and resumed flights in order to bring its own nationals back home.

"The long-term effect of this issue is uncertain, but it is certain that allowing this judgment to be enforced at the present time [while the appeal is pending] will have negative effects in Guatemala during this crisis and could lead directly to persons' lives and health being affected," Guatemala said.

Conversely, Guatemala said Teco wouldn't be harmed if the award's enforcement would be further delayed as the country is in no danger of becoming insolvent and if the judgment was affirmed by U.S. courts, it would be fully capable of paying up whenever it is required to. In January, Guatemala used that argument when asking a D.C. federal judge to pause the enforcement while it's under appeal at the D.C. Circuit.

Last month, Guatemala told the D.C. Circuit that it shouldn't be forced to pay the award because the award is still under dispute, making it too early for the courts to enforce payment. Also, it argued that Teco's Guatemala subsidiary currently only exists as a shell company and that paying the award before the appellate court made its decision could be detrimental because there's no guarantee the country would be able to recover the money if it successfully had the award annulled.

Guatemala said the specific dispute at hand could set a precedent for future cases involving the Inter American Convention on Service, under which Guatemala argued it is entitled to a pause.

"These issues are both serious as a question of law as they relate to U.S. relations with other countries, as well as being serious in that other countries could use U.S. court findings with respect to these issues to govern claims against the U.S. under the principles of reciprocity and a comity," Guatemala said.

Representatives for both parties did not immediately respond to requests for comment Monday.

Guatemala is represented by Edward Baldwin of Steptoe & Johnson LLP.

Teco is represented by Nicolle Kownacki, Francis A. Vasquez Jr., Andrea Jill Menaker and Kristen Young of White & Case LLP.

The case is Teco Guatemala Holdings Inc. v. Republic of Guatemala, case number 19-7153, in the U.S. Court of Appeals for the District of Columbia Circuit.

--Additional reporting by Michael Phillis and Kelly Zegers. Editing by Janice Carter Brown.

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