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Investment arbitration and treaty protection in Paraguay: ICSID, bilateral investment treaties and contract clauses with the state

Argentina. For full detail on Argentina, go to The Argentine Thread.

Last verified: 2026-10-28 · Status: Stable

Paraguay has been an ICSID Contracting State since 6 February 1983, and its approving laws for investment treaties with Spain, the Netherlands, Chile and Qatar offer foreign investors ICSID or other international arbitration against the State. The treaties differ: some require 3 or 6 months of consultations and make the choice between local courts and arbitration final, and the Netherlands treaty gives standing consent to ICSID. Domestic law also lets investors and state entities agree on national or international arbitration, and Ley 7561/2025 sends contract disputes with state bodies to arbitration where the contract says so.

USD figures use PYG 5,868.31 per US dollar, the Banco Central del Paraguay reference quotation published for Wednesday 28 October 2026. Conversions are for orientation only.

Key facts

ICSID Contracting State	Yes, in force since 6 February 1983 ICSID/3 (17 July 2026), as of 2026-10-28 · in force
ICSID Convention in force for Paraguay	1983-02-06 dateICSID/3 (17 July 2026), as of 2026-10-28 · in force
Spain treaty negotiation period before arbitration	6 monthsLey 461/1994, agreement art. 11, as of 2026-10-28 · in force
Chile treaty consultation period before arbitration	3 monthsLey 897/1996, agreement art. 8, as of 2026-10-28 · in force
Qatar treaty consultation period before arbitration	3 monthsLey 6271/2019, agreement art. 8, as of 2026-10-28 · in force
Netherlands treaty standing consent to ICSID	Yes Ley 349/1994, agreement art. 9, as of 2026-10-28 · in force
State entities may agree to arbitration with foreign investors	Yes Ley 117/1991 art. 9, as of 2026-10-28 · in force
BCP reference rate used for conversions	5868.31 PYG per USDBCP planilla 28 October 2026, as of 2026-10-28 · in force

The rule

1. ICSID membership. Paraguay signed the ICSID Convention on 27 July 1981, deposited its ratification on 7 January 1983, and the Convention entered into force for Paraguay on 6 February 1983 (ICSID/3, 17 July 2026). ICSID has jurisdiction over legal disputes arising directly out of an investment between a Contracting State and a national of another Contracting State that both consent to in writing; once given, consent cannot be withdrawn unilaterally (art. 25). Awards bind the parties and are subject only to the Convention's own remedies (art. 53); every Contracting State must enforce their pecuniary obligations as a final judgment of its own courts (art. 54), while laws on immunity from execution are preserved (art. 55).
Cost to do it: ICSID lodging and administrative charges under ICSID's schedule of fees, which could not be retrieved from the ICSID site on the verification date and are not restated here.
Example: A Spanish investor with a claim under the Spain treaty can file at ICSID because both states are Contracting States. / An ICSID award of US$1,000,000 (PYG 5,868,310,000) against Paraguay is enforceable in any Contracting State as a final local judgment, subject to immunity from execution rules.Convention on the Settlement of Investment Disputes between States and Nationals of Other States (Washington, 18 March 1965), Art. 25, 53, 54 and 55; ICSID/3 entry for Paraguay, 1983-02-06 official text · verified 2026-10-28

2. Spain treaty. The agreement signed on 11 October 1993 and approved by Ley 461 (promulgated 28 October 1994) requires written notice of the dispute with detailed information; if not settled amicably within 6 months, the investor may choose the host state's courts, an ad hoc UNCITRAL tribunal, ICSID, or the ICC International Court of Arbitration. The tribunal applies the treaty and other agreements between the parties, generally accepted international law and the host state's law including its conflict rules; awards are final and binding and each state undertakes to enforce them under its law. Protected investment includes loans granted to create economic value and concession rights for natural resources.
Cost to do it: Choice of forum drives cost: ICSID or ICC fees, or UNCITRAL ad hoc arbitrators' fees.
Example: A Spanish energy company notifies Paraguay in writing of a regulatory dispute on 1 December 2026; it may file arbitration from 1 June 2027 if no settlement is reached. / A US$1,000,000 loan from a Spanish parent to its Paraguayan subsidiary may itself be a protected investment under art. 1.Ley Nº 461/1994, approves the Paraguay Spain agreement for the reciprocal promotion and protection of investments, Agreement art. 1 and 11, 1994-10-28 official text · verified 2026-10-28

3. Netherlands treaty. The agreement signed in The Hague on 29 October 1992 and approved by Ley 349 (promulgated 17 May 1994) lets either party take an investment dispute to the competent courts of the host state, and contains each state's standing consent to submit any dispute with a national of the other state to ICSID conciliation or arbitration. A company incorporated in the host state but controlled by nationals of the other state before the dispute arose is treated as a foreign national for ICSID purposes under Convention art. 25(2)(b). Protected nationals include legal persons constituted under the law of a party and legal persons controlled directly or indirectly by its nationals.
Cost to do it: ICSID fees and counsel; structuring through a Dutch entity has tax and substance consequences beyond this page.
Example: A Paraguayan subsidiary owned by a Dutch holding can bring an ICSID claim in its own name if it was Dutch controlled before the dispute arose. / For a US$1,000,000 (PYG 5,868,310,000) claim, consent to ICSID is already given by Paraguay in the treaty; the investor's filing perfects it.Ley Nº 349/1994, approves the Paraguay Netherlands agreement on the promotion and reciprocal protection of investments, Agreement art. 1 and 9, 1994-05-17 official text · verified 2026-10-28

4. Chile and Qatar treaties. The Chile agreement signed in Asunción on 7 August 1995 and approved by Ley 897 (promulgated 1 August 1996) requires 3 months of amicable consultations, after which the investor may go to the host state's courts or ICSID; the choice is final, majority owned local companies are treated as foreign under ICSID art. 25(2)(b), and expropriation requires public purpose, non discrimination and prior adequate compensation at market value. The Qatar agreement signed in Doha on 11 February 2018 and approved by Ley 6271 (promulgated 13 February 2019) also requires 3 months of consultations, then offers host state courts, ICSID or an ad hoc UNCITRAL 1976 tribunal, with the choice final; it guarantees free transfer of profits, loan repayments, sale proceeds and dispute payments in freely convertible currency, and allows denial of benefits to shell companies owned by third state investors without substantial business in the home state.
Cost to do it: ICSID or UNCITRAL ad hoc costs; under the Qatar treaty, each party bears its own representation costs and arbitrator costs are shared unless the tribunal decides otherwise (art. 8.3 c).
Example: A Chilean investor that first sues the State in Paraguayan courts can no longer go to ICSID on the same dispute (Chile agreement art. 8.3). / A Qatari investor repatriating US$1,000,000 (PYG 5,868,310,000) of sale proceeds is protected by the free transfer clause, subject to taxes and good faith exceptions.Ley Nº 897/1996 (Chile) and Ley Nº 6271/2019 (Qatar), approving reciprocal investment protection agreements, Chile agreement art. 6 and 8; Qatar agreement art. 6, 8 and 11, 2019-02-13 official text · verified 2026-10-28

5. Domestic consent and contracts with the State. The investment law allows national and foreign investors, and state entities that contract with foreign investors, to agree to submit their differences to national or international arbitral tribunals. Stability contracts under Ley 5542/2015 are subject to national courts unless the contract provides for arbitration. Under Ley 7561/2025, state bodies, municipalities, state owned companies and binational entities may arbitrate contract disputes unless exclusively governed by public law, such arbitrations are always at law and public, and a contract with an arbitration clause terminated by administrative act for the contractor's breach goes to the arbitral tribunal rather than the civil or administrative courts.
Cost to do it: Negotiating an arbitration clause into a stability or public contract costs nothing extra but determines the forum for the life of the deal.
Example: A foreign investor signing a Ley 5542 stability contract adds an ICC arbitration clause seated in Asunción; without it, disputes go to Paraguayan courts (art. 24). / On a US$1,000,000 public works claim with an arbitration clause, the contractor goes to arbitration even after the ministry terminates the contract by resolution.Ley Nº 117/1991, De Inversiones; Ley Nº 5542/2015; Ley Nº 7561/2025, Ley 117 art. 9; Ley 5542 art. 24; Ley 7561 art. 2, 1992-01-07 official text · verified 2026-10-28

Partner	Signed	Approving law	Pre arbitration period	Forums	Fork in the road
Netherlands	29 Oct 1992	Ley 349 (17 May 1994)	None stated	Host courts or ICSID (standing consent)	Not stated
Spain	11 Oct 1993	Ley 461 (28 Oct 1994)	6 months from written notice	Host courts, UNCITRAL ad hoc, ICSID, ICC	Not stated
Chile	7 Aug 1995	Ley 897 (1 Aug 1996)	3 months	Host courts or ICSID	Yes, choice final (art. 8.3)
Qatar	11 Feb 2018	Ley 6271 (13 Feb 2019)	3 months	Host courts, ICSID, UNCITRAL 1976 ad hoc	Yes, choice final (art. 8.2)

Investor state dispute clauses in treaties approved by Paraguayan law (approving law texts on BACN)

Worked example

A Dutch controlled agribusiness in Paraguay faces a measure it considers expropriatory. Through its Paraguayan subsidiary, treated as Dutch under the Netherlands treaty art. 9 and ICSID art. 25(2)(b), it files an ICSID request relying on Paraguay's standing consent. A resulting award of US$1,000,000 (PYG 5,868,310,000) is binding without review by Paraguayan courts other than as a final judgment under ICSID art. 54.

Step by step

Map the ownership chain to see which treaty covers the investment and whether the vehicle meets its nationality and substance tests (for example Qatar art. 11 denial of benefits).
Check the treaty's entry into force and current status with the foreign ministry of each state; this page relies on the approving laws.
Send a detailed written notice and start the 3 or 6 month consultation period.
Avoid filing in local courts first where the treaty has a final fork in the road clause (Chile, Qatar).
For contracts with the State, negotiate an arbitration clause and seat; under Ley 7561 the case will be at law and public.

Common traps

Choosing Paraguayan courts under the Chile or Qatar treaties forecloses ICSID on the same dispute.
The Spain treaty requires written notice with detailed information; the 6 month period runs from that notice.
No investment treaty with Argentina was found among Paraguay's approving laws, so Argentine investors should not assume treaty protection; Argentine investment rules are covered in The Argentine Thread guide.
Ley 5542/2015 art. 24 still refers to arbitration under Ley 1879/2002, which Ley 7561/2025 replaced for arbitration.
Arbitration with state entities cannot be in equity and is public (Ley 7561 art. 2).

Sources

← Cross border service, evidence and documents in Paraguay: Hague conventions, Mercosur letters rogatory and the apostilleCommercial litigation in Paraguay: ordinary proceedings, deadlines, appeals, interim measures and lawyer fees →

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