Repsol and YPF (B): considering Options Case Study Solution
Introduction
As the government of Argentina had expropriated the investment of Repsol that is 98% share of YPF, which is the sovereign gas and oil producing industry in Argentina.The loss is calculated upto 51% of the company hold that resulted at $10.85 billion.As a result, Repsol is allowed to take any legal action against government of Argentina to recover their loss of investment.
Some options that have been provided to take actions against Argentina includes Arbitration, law suits, diplomacy or simply writing it off. If the company goes for arbitration option, the case would reach ISCID where all disputes related to world’s investment are solved. Currently, Argentina is facing and fighting many cases in this respective place. Moreover, if the company will lose the case, there would be no amount of compensation paid.
Law suit is also an option to fight against Argentina. There are three options where the company could file law suits such as exploration of Vaca Muerta, federal courts in New York and international companies working with YPF.
Diplomacy is putting political pressure on the government to pay for the compensation to Repsol. As the government of Spain is completely supporting Repsol to fight against Argentina. However, this substitute also has many problems and cons.
Lastly, the writing off the matter. It means that forgiving and not fighting upon previous things as there are many more things and opportunities exploited for the growth of company. However, if the company would engage itself in previous matters, there would be no time for focusing on future growth and opportunities.
Analysis
The following analysis will help the company to take appropriate steps in order to prevent itself from future threats. Moreover, it will also help to exploit opportunities that will benefit the company.
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The non-environmental issues that have been faced by Repsol to solve external factors. The analysis is further discussed below:
1. Issues:
The issue that have been faced by the Repsol is the expropriation of YPF Company in which the company have purchased 98% of shares. Repsol is planning to take any legal step against the government of Argentina. There are some options that have been available for the company. These options include arbitration, law suits, diplomacy or writing it off.
2. Institutions:
The institutions that have been the main part of the issues are management of Repsol Company, government of Argentina and the government of Spain. However, by choosing any appropriate step would include other institutions as well. If the company goes for arbitration, ISCID institution will also be added as this institution would help the company to solve this major issue. In addition, if the company decides to file a law suit against government of Argentina, the court in which the case would be fought will be added as an institution. If the company would choose diplomacy, both governments with world federation would be listed as institutions. However, if going for writing off, there would be no institution that would be listed.
3. Interests:
The interest of Repsol Company is to take any legal action against the government of Argentina in order to fulfill the financial loss that has been caused to the company due to expropriation of the company. In addition, the other stakeholders of Repsol Company are also waiting for the final decision that would be taken in the favor of Repsol Company. However, there is also fear of relationships that exists between two companies and would get disturbed. Moreover, there is also fear of losing case if the arbitration is chosen to do.
4. Information:
The information that would be needed in order to frame the issues is the causes of the dispute and expropriation. Moreover, the reasons of choosing a particular legal system that would be used for taking action against the government of Argentina.
Question 1: which of the legal step is in interest of Repsol Company?
The legal steps that can be taken by Repsol include arbitration, lawsuits, diplomacy and simply writing it off. The best step that can be taken by Repsol and would be beneficial for the company would be going for diplomacy, which means putting pressure on Argentina’s government.Diplomacy would help the government to settle down the loss that has been caused due to the expropriation of Repsol’s investment, YPF Company.
However, this step would hurt the relationships between the two countries, Argentina and Spain. Moreover, there are also other issues that are being faced by Spanish government. These issues include protecting other companies that have been invested in Argentina such as Telefonica. In addition, the other stake holders of Repsol are also waiting for the results of this dispute. The major stakeholders, sharing 12.2% and 9.37% respectively naming La Caxine and Phenex,who are eagerly waiting for the final decision of the settlement. The World Bank also condemned the decision taken by the government of Argentina..................
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