Publications

DOMINICAN REPUBLIC

Two dual nationals seek to set aside award in favour of the Dominican Republic 

Two US-Dominican dual nationals, real estate investors Michael and Lisa Ballantine, have applied to set aside a DR-CAFTA award that rejected their US$41.5 million claim against the Dominican Republic.They  claim that the majority tribunal exceeded its powers and manifestly disregarded the law when it concluded they lacked standing to bring the claim.

The dispute relates to a claim filed under the Dominican Republic-Central America free trade agreement regarding the denial of permission by the Dominican Ministry of the Environment in 2014 to expand their Jamaca de Dios development in the country’s Cordillera mountains. The Dominican authorities said the terrain for the project, which included luxury homes, restaurants, a hotel and spa, was too steep to build on - and later that it was in an environmentally protected area.

The Dominican Republic challenged the jurisdiction of the tribunal based on the language of DR-CAFTA, which only allows claims by dual nationals against one of their countries of nationality if their dominant and effective nationality is not that of the host state.

The award found that the Ballantines’ dominant and effective nationality had been Dominican when the alleged treaty violations occurred and when they filed their claim. By majority the tribunal found that that the motivation for obtaining Dominican nationality was “economic or commercial in nature,” was “key to their business” and “took precedence” over their US connections between 2010 and 2014.

The dissenting arbitrator held  that the nationality test “remains a holistic one that focuses on the totality of one’s personal, familial, economic, and civic ties over a lifetime.”

Panama

PCA panel constituted to hear claim against Panama

A tribunal has been constituted to hear a case at the Permanent Court of Arbitration (“PCA”) brought against Panama by a shareholder in a liquidated insurance company.

It is understood that the claim was brought against Panama under the Panama-Dominican Republic bilateral investment treaty by Leopoldo Castillo Bozo, who previously owned shares in Panamanian insurance company Seguros BBA.The claim relates to the forced liquidation of Seguros BBA. The authorities reportedly said that BBA was sanctioned on up to eight occasions between 2015 and 2017 in relation to money laundering, non-compliance with consumer protection obligations and operating without adequate reinsurance among other issues.

Legal representatives of BBA are said to have filed a criminal complaint against Castillo, alleging he illegally appropriated funds that did not belong to him and manipulated the insurer’s accounts.

Castillo is reportedly claiming the company was expropriated and is seeking US$10 million in damages.

Peru

Peruvian appeal court releases 8 detained arbitrators in Odebrecht case

The First Criminal Court of Appeals upheld appeals by eight of 14 arbitrators who had been sentenced to 18 months’ pre-trial detention by the Peruvian Third Court of Investigation in Crimes of Corruption for allegedly taking bribes to favour scandal-hit Brazilian construction company Odebrecht in a series of cases that cost the state more than US$250 million.

Most of the arbitrators are accused of taking cash bribes while a few were charged based on their allegedly inflated arbitrator fees in ad hoc disputes. The arbitrators remain under investigation and have been ordered to pay roughly US$30,000 in bonds as a surety before they are released from prison and have arrest warrants dropped respectively.

This case relates to Brazilian construction group Odebrecht, which agreed in 2016 to pay US$2.6 billion fine as to US, Swiss and Brazilian authorities after admitting to paying bribes worth US$788 million across 12 countries between 2001 and 2016, including US$29 million to Peruvian government officials over nine years.

Venezuela

US investor  fails to revive failed treaty claim against Venezuela

Two Venezuelan subsidiaries of US bottlemaker Owens-Illinois have failed to revive a billion-dollar treaty claim against Venezuela that was dismissed for having been filed after the state's denunciation of the ICSID Convention. 

The claim was filed under the Netherlands-Venezuela bilateral investment treaty, in which the Owens-Illinois companies sought over US$1 billion for Venezuela’s expropriation of two glass bottle production plants.

The tribunal found it lacked jurisdiction as there had been no mutual consent by the parties to submit the dispute to arbitration prior to Venezuela’s notice of denunciation of the ICSID Convention in 2012. That finding departed from decisions of other ICSID tribunals from around the same time, which have held that claims filed during the six-month period after the state's notice of denunciation were still admissible.

Owens-Illinois sought to have the award annulled on two grounds: manifest excess of powers and failure to state reasons. However, an ICSID ad hoc committee has rejected an annulment application.