Facts of the case
Starting in 1989, Argentina undertook a program of privatisation of State owned companies, including the gas transportation and distribution sectors. Shortly thereafter, as part of the economic policies, the Argentine peso was fixed at par with the United States dollar in 1991.
US companies Enron Corporation and Ponderosa Assets LP relied on the then existing regulatory framework in making the decision to invest in Transportadora de Gas del Sur (“TGS”) upon its privatisation, especially in the conditions that tariffs would be calculated in US dollars; that tariffs would be subject to semi annual adjustment according to changes in the US Produce Price Index (“PPI”); that there would be no price freeze applicable to the tariff system or that if one was imposed the licensee had a right to compensation; that the license would not be amended by the Government in full or part except with the prior consent of the licensee; that the licence agreement would be for 35 years with the possibility of a 10 year extension.