Trying times: multinationals increasingly sue for big bucks when Latin American deals go bad. (Law).

You don't have to look for the latest jackpot jury award from the U.S. civil courts to get a jolt of legal sticker shock. Try out U.S. energy company MKJ Xploration's claim against Costa Rica over a canceled oil project: US$57 billion, more than three times the Central American country's annual economic output.

That's just the latest salvo in an ever-rising barrage of huge claims against poor countries. As trade increases, companies from Mexico to Chile are suing governments over perceived losses to the tune of hundreds of millions of dollars. It goes both ways. Argentina's largest province, Buenos Aires, wants a water system it expected Azurix, a unit of collapsed U.S. energy company Enron, to build. If not, $600 million will patch things up, the local government says.

"There's more international trade going on now than there has ever been," says Joe Zumpano, managing partner for Miami law firm Ferrell Schultz Carter Zumpano & Fertel. "As multinationals move in ... you're getting conflict."

MKJ President Brent Abadie says he has assurances Costa Rica will pay. "We respect President Pacheco and will honor his political decision regarding exploration activity in Costa Rica:' Abadie says, "just as he has stated he intends to honor Costa Rica's obligations to the company in recognition of our investments and lost revenues.

Lawyers who represent multinationals say Latin American governments have to clarify their rules for international trade or they will scare off investors-and face more big-ticket lawsuits. "When you're in the international arena, when the governments don't have to pay some sort of penalty for non-compliance, it creates a great amount of instability in the region." says Patricia Menendez-Cambo, co-chair of Greenberg Traurig's international practice in Miami.

Sometimes disputes arise from differences between the U.S. judicial system and those of Latin American countries. Sometimes new governments are disdainful of their predecessors' deals. Anti-foreign sentiment has sparked protests that killed international deals. Conflicts stem, too, from trade agreements put together too quickly.

Enforcer. Lawsuits are not the only danger. "Some of these countries have international debt that carries requirements, certain covenants." says Menendez-Cambo. "Disputes like this could affect what is negotiated with the Inter-American Development Bank."

Trade deals themselves can be used to create pressure. In Peru and Ecuador, which also have unresolved disputes with multinational companies, the Andean Trade Preference Act puts the United States in the role of enforcer-a role it seems comfortable playing.

In Colombia, for example, state-owned telecommunications company Telecom paid nearly $73 million to Canada's Nortel Networks Corp. after the U.S. government warned that $800 million in duty-free privileges could be forfeited if such disputes weren't resolved. "It's not fair when governments don't pay:' says William Lash, U.S. assistant secretary of commerce for market access and compliance.

Also in Colombia, energy company Electrificadora del Atlantico is embroiled in a $60 million breach-of-contract dispute with TermoRio, a unit of U.S. power giant Sithe Energies. Colombia agreed to arbitration that eventually favored Sithe, but the country's highest court annulled the payment in 2002.

"With this decision, Colombia seems to reserve the right to change the rules of the game when it decides not to fulfill contracts:' Sithe Senior Vice President Robert Kartheiser said at the time of the ruling. "We intend to seek all legal redress both inside and outside Colombia. We are not satisfied. This is not the last chapter."

UPPING THE STAKES

As trade rises, to do disputes between multinationals and governments.

LITIGANTS                         ISSUE                    CLAIM

MKJ Xploration/Harken vs. Costa   Canceled oil project     $57 billion
 Rica
Buenos Aires province vs. Azurix  Abandoned water          $600 million
 (Enron)                          concession
Encana, Occidental Petroleum and  Value-added tax dispute  $180 million
 Repsol vs. Ecuador                in oil services
                                   contracts
Sithe Energies vs. Colombia       Contract dispute         $60 million


Nortel vs. Colombia               Contract dispute         $73 million

STM Wireless vs. Peru             Canceled contract        $27.8 million
Bech Corp. vs. Bolivia            Canceled water lease     $25 million
Metal ad vs. Guacazar, Mexico     Canceled waste dump      $15.6 million
Exxo Mobil vs. Chile              Mine sale dispute        $7 million

LITIGANTS                         STATUS

MKJ Xploration/Harken vs. Costa   Pending
 Rica
Buenos Aires province vs. Azurix  Pending
 (Enron)
Encana, Occidental Petroleum and  Pending
 Repsol vs. Ecuador

Sithe Energies vs. Colombia       Court annulled
                                   arbitration deal
                                   favouring Sithe
Nortel vs. Colombia               Resolved in Nortel's
                                   favor
STM Wireless vs. Peru             Pending
Bech Corp. vs. Bolivia            Pending
Metal ad vs. Guacazar, Mexico     Metalclad won lawsuit
Exxo Mobil vs. Chile              Pending

SOURCE: LATIN TRADE