The Bank of Nova Scotia said Thursday is seeking more than US$600 million from the government Argentina, claiming “discriminatory action” by the South American country led to the loss of its investment in Scotiabank Quilmes, whose licence was revoked in August 2002.

The bank said it filed a notice of arbitration under the terms of a treaty designed to protect the interests of investors doing business in foreign countries.

“A series of expropriatory and discriminatory actions taken by the Argentine government directly caused the loss of its investment and violated its treaty rights of fair treatment,” Scotiabank said in a statement.

The bank said it, and its shareholders, experienced “significant damages.”

Among other things, Scotiabank alleges that the Argentine Central Bank prevented Scotiabank Quilmes from paying a note which came due, refused to provide it (but not other banks) with additional liquidity during Argentina’s banking crisis, and further obstructed Scotiabank Quilmes’s attempts to restructure and reopen.

The Argentine Central Bank subsequently pulled Quilmes’s licence to operate. Scotiabank took a $540 million after-tax charge to cover its exposure and loans through its Quilmes subsidiary.

Under terms of the 1991 Protection of Investments Treaty signed by Argentina and Canada, Scotiabank’s claim will be dealt with by a three-person arbitration panel. One panel member will come from the bank, one from the Argentine government, and a third panel member must be agreed to by both sides.

“This is the first time in the Bank’s 173-year history that it has made a claim of this nature, but a series of expropriatory and discriminatory actions taken by the Argentine government directly caused the loss of its investment and violated its treaty rights of fair treatment,” Scotiabank said. “As a result, the Bank and its shareholders experienced significant damages and as such it intends to vigorously pursue the right to compensation under the treaty.”