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Railroad Development Corp. (RDC) recently filed a claim with an international arbitration board seeking to institute arbitration proceedings against the Republic of Guatemala under the Dominican Republic-Central America-United States Free Trade Agreement (CAFTA).

Filed on behalf of RDC and Guatemalan affiliate Ferrovias Guatemala (FVG) with the International Centre for the Settlement of Investment Disputes (ICSID) in Washington, D.C., the claim requests arbitration to help settle a dispute with the Guatemalan government over a 1998 privatization agreement.

RDC has been seeking $65 million in compensation because the government in August 2006 declared the rolling stock component of the agreement as “lesivo,” or against the interests of the state. The decision “derailed” FVG’s business prospects because the railroad couldn’t obtain credit or generate lease revenue and customers didn’t want to conduct business with a private company “under attack” by the government, RDC claims.

“CAFTA provides for a three-month ‘cooling off’ period for negotiations, which the government of Guatemala declined to utilize while watching FVG’s business prospects plummet,” said RDC President Robert Pietrandrea in a prepared statement. “This has left us no choice but to pursue our remedies to this conflict at the international level.”

RDC owns railroads in the United States, Argentina, Guatemala, Peru, Malawi and Mozambique.