Peru is mounting a vigorous defense against Arizona-based mining giant Freeport-McMoRan Inc., arguing the company is abusing the annulment process in its quest to overturn a tribunal ruling that left $417 million in penalties and interest untouched.

In a Sept. 16 brief, released Tuesday, Peru told the International Centre for Settlement of Investment Disputes (ICSID) that Freeport’s allegations of a procedural misstep were baseless. The government insists arbitrators acted within their authority when they declined to rule on penalties and interest tied to unpaid royalties at the company’s Peruvian operation.

The Tribunal’s Call

The case stems from a previous ICSID ruling that dismissed Freeport’s challenge to Peru’s imposition of $942 million in taxes and royalties on Sociedad Minera Cerro Verde SAA, an open-pit mine in Arequipa, for the years 2006 through 2013. While the tribunal considered the taxes and royalties, it refused jurisdiction over the $417 million in penalties and interest on royalties and $245 million on tax-related penalties, citing the U.S.-Peru trade agreement’s carveout for taxation measures.

Freeport claims the tribunal contradicted itself—first taking jurisdiction over royalty-related penalties, then sidestepping them in its final award. Peru, however, called this argument a distortion.

“The company cannot cite a single line in which the tribunal affirmed jurisdiction over those claims—because there is none,” Peru argued.

Peru Accuses Freeport of “Abuse”

Peru stressed that the tribunal properly treated penalties and interest as inseparable from the nation’s tax regime, qualifying them as taxation measures under the trade agreement. The government also argued Freeport should have pursued a supplementary decision if it believed the tribunal had overlooked part of its case, rather than seeking annulment.

By escalating the matter to an ad hoc committee, Peru says, Freeport is engaging in “an abuse of the annulment process,” a remedy reserved for extraordinary procedural flaws. The government is now pressing for Freeport to shoulder all related costs, including ICSID and committee fees plus Peru’s legal expenses.

Freeport Strikes Back

In May, Freeport countered that annulment was warranted because the tribunal “manifestly exceeded its powers” by failing to decide the royalty penalty claims. The company accuses arbitrators of conflating royalties with taxes, thereby neglecting their duty to rule and failing to meet ICSID’s procedural standards.

High-Stakes Representation

Freeport is backed by a legal team from Debevoise & Plimpton LLP—Dietmar W. Prager, Laura Sinisterra, Nawi Ukabiala, Julianne J. Marley, and Federico Fragachán—alongside Rodrigo Elias & Medrano’s Luis Carlos Rodrigo Prado and Francisco Cardenas Pantoja.

Peru is represented by Ricardo Puccio of Navarro & Pazos Abogados; Stanimir A. Alexandrov of his own PLLC; and Baker Botts LLP’s Jennifer Haworth McCandless, Alejandro Escobar, and María Carolina Durán.

What’s Next

The annulment battle could determine whether Freeport can reopen the door to nearly half a billion dollars in disputed penalties, or whether Peru’s claim remains locked tight. For now, the Andean nation is standing firm, portraying Freeport’s maneuver not as a quest for justice but as a dangerous overreach that risks undermining the sanctity of international arbitration.