SOURCE: PRACTICAL LAW ARBITRATION
In Hope Services LLC v Republic of Cameroon (ICSID Case No. ARB/20/2) an ICSID tribunal decided it did not have jurisdiction to hear claims against Cameroon.
In a French language decision, an ICSID tribunal has found that it did not have jurisdiction to hear claims brought by a US investor against Cameroon under the US-Cameroon bilateral investment treaty (BIT).
It chose to assume the authenticity of documents that had been contested in order to determine whether it had jurisdiction, opining that if it found it did not have jurisdiction, the question would be moot and if it did, a further investigation would be necessary.
In deciding whether Cameroon had validly invoked the denial of benefits clause in article I(3) of the BIT, the tribunal noted that the parties were agreed that the substantive requirement of the investor being owned or controlled by a third party was satisfied because the investor was owned by a French national. However, citing Ampal-American Israel Corp v Arab Republic of Egypt (ICSID Case No. ARB/12/11) (the most pertinent previous award on the issue), it considered that the procedural requirement of that article had not been satisfied because Cameroon had failed to promptly engage in discussions with the US to reach a mutually agreeable solution, having waited three years from the time it received a notice of dispute.
Although the tribunal concluded that there was a protected investment under the BIT in that there was a contribution in the territory for a certain duration generating profit and an assumption of risk, it found that the claimant did not qualify as a protected investor under the BIT because it had failed to evidence its ownership (whether direct or otherwise) of the investment. It did not consider Cameroon’s argument that the claimant had engaged in an abuse of process by commencing the arbitration nor whether this issue raised a jurisdictional question or was an issue for the merits because this issue was moot.
Although Cameroon was successful in the arbitration, the tribunal decided not to apply the costs follow the event principle because, among other things, Cameroon had failed to pay its share of the advance on costs and had engaged in behaviour that had increased the costs of the proceedings. It ordered each party to bear its own costs.
The decision contains a useful analysis of the denial of benefits clause of the type in this BIT.
Case: Hope Services LLC v Republic of Cameroon (ICSID Case No. ARB/20/2) (23 December 2021) (Tribunal: Maxi Scherer (President); Nassib G. Ziade (claimant); Pierre Mayer (respondent).
