Your SlideShare is downloading. ×
C. Ononaiwu - ICSID Cases Involving CARICOM States (OAS-CRNM-CARICOM Workshop - June 2008)
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×

Introducing the official SlideShare app

Stunning, full-screen experience for iPhone and Android

Text the download link to your phone

Standard text messaging rates apply

C. Ononaiwu - ICSID Cases Involving CARICOM States (OAS-CRNM-CARICOM Workshop - June 2008)

1,221
views

Published on

Published in: Economy & Finance, Travel

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
1,221
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
21
Comments
0
Likes
0
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. ICSID CASES INVOLVING CARICOM STATES Dr Chantal Ononaiwu Trade Policy & Legal Specialist Caribbean Regional Negotiating Machinery OAS/CRNM/CARICOM WORKSHOP “NEGOTIATING CARICOM INVESTMENT AGREEMENTS: STATE OF PLAY AND WAY FORWARD” GRENADA REX RESORT HOTEL, GRENADA, 22-25 JUNE 2009
  • 2. Introduction 2 Five CARICOM Member States have been involved in disputes brought to ICSID: Grenada (2) Guyana (1) Jamaica (3) St Kitts & Nevis (1) Trinidad & Tobago (2) Most of these cases were brought pursuant to ISDS clauses in contracts. Only two were initiated under ISDS provisions in BITs.
  • 3. Contract- Contract-based Cases 3 Grenada • WRB Enterprises & Grenada Private Power Ltd v Grenada • RSM Production Corporation v Grenada Jamaica • Alcoa Minerals of Jamaica Inc v Jamaica • Kaiser Bauxite Co v Jamaica • Reynolds Jamaica Mines Ltd & Reynolds Metals Co v Jamaica
  • 4. Contract- Contract-based Cases 4 St Kitts & Nevis • Cable Television of Nevis & Cable Television of Nevis Holdings v Federation of St Kitts & Nevis Trinidad & Tobago • Tesoro Petroleum Corporation v Trinidad & Tobago
  • 5. Treaty- Treaty-based Cases 5 Guyana • Booker plc v Guyana Trinidad & Tobago • FW Oil Interests v Trinidad & Tobago
  • 6. Subject Matter of Disputes 6 Oil and gas exploration and Bauxite mining exploitation Privatization of Cable TV charges electricity enterprise Debt arising from nationalisation
  • 7. GRENADA’S DISPUTES 7
  • 8. WRB Enterprises & Grenada Private Power Ltd v Grenada 8 • In 1994, the government agreed to sell to WRB Enterprises (a US company) a 50% stake in the island’s electricity company, GRENLEC. • The successor government refused to approve the privatization, claiming the deal was unfair. • In 1997, the government threatened to re-nationalize the company by buying out WRB. However, WRB was unwilling to renegotiate. • WRB brought the dispute for arbitration before ICSID in 1997. • The government later accepted the privatization and the parties agreed to a settlement.
  • 9. RSM Corporation v Grenada 9 • In 1996, RSM (a US company) and Grenada entered into an agreement for the exploration, and potential extraction, of oil and gas deposits in a designated area off Grenada, Petite Martinique and Carriacou. • RSM contracted to apply, within 90 days of signature of the agreement, for an exploration license, which Grenada had to award. • Under the contract, RSM could invoke force majeure to excuse performance of the agreement and delay the 90-day period for applying for the license. There was no time limit to the period of force majeure. • Force majeure covered Grenada’s maritime boundary dispute with Venezuela and Trinidad & Tobago. • RSM was required to take ‘all reasonable steps’ to remove the cause of the force majeure.
  • 10. RSM Corporation v Grenada 10 • Fourteen days after the agreement was signed, RSM invoked the force majeure clause, which allowed it to suspend the 90-day period for the next 8 years. • During this 8-year period, RSM’s CEO participated in Grenada’s maritime boundary negotiations with Venezuela and Trinidad & Tobago. • Unilaterally, he attempted to negotiate with Venezuela and commenced a lawsuit against Venezuela’s state oil company. • He authorized false maps that favoured T&T, pursued unilateral proceedings against T&T before ICSID and ITLOS and wrote a threatening letter to the Prime Minister of T&T.
  • 11. RSM Corporation v Grenada 11 • In January 2004, RSM notified its revocation of force majeure and applied for a licence in April 2004. • Grenada refused to grant the licence and terminated the agreement in July 2005. • In 2005, RSM initiated ICSID arbitration proceedings pursuant to the arbitration clause in the agreement. • RSM sought a declaration that the 1996 agreement was still in force and Grenada must grant it a licence. In the alternative, it sought damages.
  • 12. RSM Corporation v Grenada 12 • Grenada alleged breach of contract and counterclaimed for illegal misrepresentation under Grenadian law, entitling termination of the agreement and damages. • It claimed that RSM’s actions in relation to T&T and Venezuela amounted to a breach of its obligation regarding removal of force majeure. • Grenada also claimed that it was misled to believe that RSM was able to carry out exploration and development, as well as the expertise to assist with maritime boundary delimitations.
  • 13. RSM Corporation v Grenada 13 • In 2006, while the ICSID arbitration proceedings were pending, RSM filed a complaint in a New York court against a Grenadian Senator and three other persons, raising issues of corruption against them and claiming over US$500 million in damages. • The arbitration tribunal made several procedural orders in relation to the New York legal proceedings. Ultimately, the tribunal was satisfied that the Senator’s testimony before it was not adversely affected by those proceedings.
  • 14. RSM Corporation v Grenada 14 • The arbitration rendered its award in 2009, dismissing RSM’s substantive claims. • The 1996 agreement had either lapsed in March 2004 when the 90-day period expired, or was lawfully terminated by Grenada in 2005. • Grenada’s counterclaim was also rejected. • RSM’s breach of its obligation regarding removal of force majeure did not entitle termination of the agreement and Grenada did not prove loss entitling damages. • Some of the alleged misrepresentations were not made and, where the CEO had made misrepresentations, they were not fraudulent. • The parties were ordered to bear their own legal costs and split the costs of arbitration.
  • 15. GUYANA’S DISPUTE 15
  • 16. Booker plc v Guyana 16 • In 1976, Guyana nationalized a UK company’s investments in the Guyanese sugar industry. • A long-term compensation plan was agreed. • Payment installments were interrupted in the 1980s while the government considered re-privatization of the sugar industry. • When the government decided against this, negotiations over payment of the remaining debt resumed. • After unsuccessful negotiations, Booker plc invoked the UK-Guyana BIT to launch arbitration with ICSID.
  • 17. Booker plc v Guyana 17 • An arbitration ruling requiring Guyana to pay Booker plc could have jeopardized the country’s efforts to qualify for the IMF’s Highly Indebted Poor Countries programme. • Following negative press coverage and demonstrations in the UK, Booker plc’s parent firm abandoned the claim and the proceedings were discontinued.
  • 18. JAMAICA’S DISPUTES 18
  • 19. Alcoa Minerals, Kaiser Bauxite, Reynolds Jamaica Mines v Jamaica 19 The Government of Jamaica entered into agreements with several US bauxite companies to construct an alumina refining plant in return for a 25-year bauxite mining concession. The agreements contained a “no further tax” clause, under which Jamaica undertook to impose only those taxes and royalties specified in the agreement. The agreements also provided for the submission of disputes arising under them to ICSID.
  • 20. Alcoa Minerals, Kaiser Bauxite, Reynolds Jamaica Mines v Jamaica 20 In 1974, the Government decided to renegotiate aspects of the agreements in order to secure greater national control over bauxite reserves and to derive a higher level of revenues from the sector. In May 1974, Jamaica introduced the Bauxite (Production Levy) Act, which imposed a new tax on bauxite mining. Shortly before enacting the statute, Jamaica filed a notification with ICSID, pursuant to Article 25(4) of the Convention, to exclude disputes arising out of an investment relating to minerals or other natural resources.
  • 21. Alcoa Minerals, Kaiser Bauxite, Reynolds Jamaica Mines v Jamaica 21 Three of the bauxite companies initiated separate arbitration proceedings before ICSID, seeking the return of the monies paid pursuant to the Act. Jamaica refused to appoint an arbitrator and failed to appear at the first meeting of the arbitration tribunal. The tribunal decided to deal with its jurisdiction as a preliminary point in order to determine whether: the disputes fell within the subject-matter jurisdiction of ICSID; and Jamaica’s notification of withdrawal affected the prior consent to arbitration.
  • 22. Alcoa Minerals, Kaiser Bauxite, Reynolds Jamaica Mines v Jamaica 22 The tribunal held that the disputes were within the jurisdiction of ICSID. The case concerned a legal dispute arising directly out of an investment Jamaica is a Contracting State under the Convention and the companies were nationals of the US, another Contracting State The companies and Jamaica consented in writing to submit the dispute to ICSID.
  • 23. Alcoa Minerals, Kaiser Bauxite, Reynolds Jamaica Mines v Jamaica 23 It found also that Jamaica could not withdraw its consent to the arbitration given in the agreements. Its notification to ICSID could only operate in respect of potential future investors. “[A]ny other interpretation would...deprive the Convention of any practical value for Contracting States and investors” The parties eventually reached a settlement and the proceedings were discontinued in 1977.
  • 24. Alcoa Minerals, Kaiser Bauxite, Reynolds Jamaica Mines v Jamaica 24 Further challenges to the bauxite levy were made in other fora. In 1976, Revere Jamaica Ltd initiated a constitutional challenge to the Bauxite (Production Levy) Act before the Supreme Court of Jamaica. The Supreme Court found that an undertaking to bind the Government as to future taxation was invalid and created no valid contractual right in favour of Revere.
  • 25. Alcoa Minerals, Kaiser Bauxite, Reynolds Jamaica Mines v Jamaica 25 In 1976, Revere Copper & Brass instituted a claim under the expropriation provision of a guaranty contract with the Overseas Private Investment Corporation (OPIC), before the American Arbitration Association. The arbitration tribunal found an expropriation under the terms of the contract. The Government’s introduction of the levy directly prevented Revere from exercising effective control over the use or disposition of its property. Revere was awarded approximately US$1.1 million plus interest of 6% p.a.
  • 26. ST KITTS & NEVIS’ DISPUTE 26
  • 27. Cable TV Nevis & Cable TV Nevis Holdings v St Kitts & Nevis 27 • In 1986, two US-owned companies entered into an agreement with the Nevis Island Administration (NIA) granting them a cable TV franchise. • The agreement contained an ICSID arbitration clause. • The companies instituted arbitration proceedings against the Federation of St Kitts & Nevis in respect of a dispute related to charges for cable TV services in Nevis. • The Federation objected to ICSID’s jurisdiction in the matter.
  • 28. Cable TV Nevis & Cable TV Nevis Holdings v St Kitts & Nevis 28 Article 25, ICSID Convention: (1) The jurisdiction of the Centre shall extend to any legal dispute arising directly out of an investment, between a Contracting State (or any constituent subdivision or agency of a Contracting State designated to the Centre by that State) and a national of another Contracting State, which the parties to the dispute consent in writing to submit to the Centre… (3) Consent by a constituent subdivision or agency of a Contracting State shall require the approval of that State unless that State notifies the Centre that no such approval is required.
  • 29. Cable TV Nevis & Cable TV Nevis Holdings v St Kitts & Nevis 29 • The Tribunal declined jurisdiction over the dispute. • NIA, and not the Federation, was the party to the agreement containing consent to ICSID jurisdiction. • The Constitution of St Kitts & Nevis established Nevis as a constituent subdivision of the Federation. • The NIA had not been designated to ICSID as a constituent subdivision under Article 25(1) of the ICSID Convention. • The Federation had not notified ICSID, pursuant to Article 25(3), that its approval of NIA’s consent to ICSID jurisdiction was not required.
  • 30. TRINIDAD & TOBAGO’S DISPUTES 30
  • 31. Tesoro Petroleum Corporation v Trinidad & Tobago 31 • In 1968, Tesoro and the Government of Trinidad and Tobago entered into a joint venture to purchase and develop oil fields. • After the first 5 years of operation of the joint company, dividends could be declared. • From 1981, relations between the Government and Tesoro became strained. • The Government refused to approve the declaration of dividends for 1981 and 1982. • In 1982, Tesoro decided to sell its shares in the joint venture and the parties entered into negotiations over the Government’s possible purchase of the shares.
  • 32. Tesoro Petroleum Corporation v Trinidad & Tobago 32 • In 1983, Tesoro initiated conciliation proceedings before ICSID, seeking damages for the Government’s alleged breach of its obligation to support the payment of dividends for the two years. • In light of the Conciliator’s recommendations, the parties agreed in 1985 to settle the matter through payment of dividends to the shareholders for the period 1981-1985. • The case has been cited as a good example of how conciliation proceedings may help the parties settle their differences at relatively small cost of time and money.
  • 33. FW Oil Interests v Trinidad & Tobago 33 FW Oil (a US firm) claimed that, in 2000, it was awarded a contract to develop oil and gas fields located off Trinidad’s south-west coast, but the contract was revoked several months later. In 2001, FW Oil instituted ICSID arbitration proceedings under the US-Trinidad & Tobago BIT. It alleged that Trinidad & Tobago had breached the contract, the laws of Trinidad & Tobago and the BIT, and claimed compensation for its lost profits and wasted costs.
  • 34. FW Oil Interests v Trinidad & Tobago 34 The Trinidad & Tobago press reported that FW Oil had alleged that it was the victim of corruption by officials by state enterprises and a former Government Minister. The arbitration tribunal rendered its award in 2006, finding that FW Oil had not established that it had an “investment” as defined under the terms of the BIT.
  • 35. THANK YOU chantal.ononaiwu@crnm.org www.crnm.org 35