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Railroad entrepreneur Henry Posner recovers $14.6M from Guatemala

Steven Adams | Tribune-Review
Henry Posner III rides a Ferrovias Guatemala steam train through Guatemala in 2005.

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By Thomas Olson
Tuesday, Dec. 3, 2013, 4:15 p.m.
 

It took about six years, but Henry Posner III finally got his due from Guatemala: $14.6 million.

The Pittsburgh entrepreneur received the money on Tuesday because an international tribunal said Guatemala unfairly forced the shutdown of a railway that his company revived in 1997.

Posner's Railroad Development Corp., Green Tree, in 2007 was the first to file — not to mention win — an investor-versus-sovereign state claim under the Central America Free Trade Agreement.

“The loss of the railway for a second time was a national tragedy, and it can truly be said that there were no winners in this case,” Posner said in a statement. “But this now offers Guatemala the opportunity to once again look to the international railway investment community to develop the urban train, dry canal, Mexican rail link and other projects that the country aspires to.”

Posner, who owns and chairs Railroad Development and its affiliate, Ferrovias Guatemala, could not be reached for additional comment.

A tribunal of the International Centre for Settlement of Investment Disputes ruled in June 2012 that Guatemala violated standards contained in CAFTA when the state tried to strong-arm Posner's Ferrovias Guatemala to renegotiate terms of its agreement with the government to operate the railway. The tribunal ordered the state to pay $14.6 million in damages, interest and costs. In return, Railroad Development surrendered its 82 percent ownership of the Guatemalan railway.

In 1997, Posner's company negotiated a 50-year agreement with Guatemala to revive and operate its national railway, FEGUA, a year after the government shut it down. The system had about 500 miles of track and operated with 15 diesel locomotives.

But, in August 2006, the government issued a presidential decree declaring the contract “harmful to the interests of the state” and tried to force Posner's company to give up “key economic rights.”

Given the challenges and uncertainties the dispute created, Posner shut down FEGUA in 2007. Since then, even the steel from bridge trestles has been stolen and sold for scrap.

Posner's Railroad Development was represented in the dispute by Greenberg Traurig, an international law firm in Washington.

“The overall result demonstrates that governments must respect investments made by nationals of the contracting parties and that their expectation-backed rights can be vindicated,” C. Allen Foster, a shareholder at Greenberg Traurig, said in a statement.

Thomas Olson is a Trib Total Media staff writer. He can be reached at 412-320-7854 or at tolson@tribweb.com.

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