- Gramercy says Peru violating terms of U.S. free-trade accord
- Fund said Peru’s ‘stonewalling’ on talks led to decision
Gramercy Funds Management LLC is seeking to enter arbitration with Peru over the $1.6 billion it says it’s owed from decades-old defaulted bonds.
The claim for violations under the U.S.-Peru Free Trade Agreement was filed Thursday, according to an e-mailed statement from the Greenwich, Connecticut-based hedge fund. Gramercy had filed notice of its intent to seek arbitration in February.
“Peru’s stonewalling and steadfast refusal to have any substantive discussions has left Gramercy no choice but to commence and vigorously pursue this arbitration and enforce its rights, ” Chief Investment Officer Robert Koenigsberger said in the statement.
Gramercy is seeking payment for bonds issued under Peru’s military dictatorship in the 1960s and 1970s as compensation to farmers whose lands were seized as part of an agrarian reform. Peru defaulted on the debt after the economy collapsed in the 1980s. Gramercy said it began purchasing defaulted land bonds in 2006.
Peru “will defend itself vigorously” and said it has an exceptional track record in international arbitration, according to an e-mailed statement. “Gramercy has not shown that it is a legitimate investor that made lawful investments in Peru, or that it is entitled to jurisdiction under the Treaty. Gramercy also has not shown that Peru has violated international law.”
“This is a campaign to try to tarnish the reputation of Peru,” Finance Minister Alonso Segura said in an interview during a March trip to New York.
Gramercy is proposing that the arbitration proceedings be conducted in English in New York.