ICSID Arbitration Ruling Decides Initial Jurisdictional Issues


Pacific Rim v El Salvador (ICSID Case No. ARB/09/12) is a recent decision by the International Centre for Settlement of Investment Disputes (ICSID).  The arbitration is brought under the Dominican Republic — Central America — United States Free Trade Agreement (CAFA) and Investment Law of El Salvador. 

The dispute between the parties are Pac Rim’s claims against El Salvador relating to the following allegations:  “(i) the Respondent‟s arbitrary and discriminatory conduct, lack of transparency, unfair and inequitable treatment in failing to act upon the Enterprises’ [i.e., subsidiary companies] applications for a mining exploitation concession and environmental permits following the Claimant‟s discovery of valuable deposits of gold and silver under exploration licenses granted by MINEC for the Respondent; (ii) the Respondent’s failure to protect the Claimant’s investments in accordance with the provisions of its own law and (iii) the Respondent’s unlawful expropriation of the investments of the Claimant (with the Enterprises) in El Salvador.

The dispute is undoubtedly complex.  But after three years of litigation the tribunal has gotten to the point where it is resolving jurisdictional defenses.  Its decision on jurisdiction is hundreds of pages long, broken up into seven subparts, each individually and separately numbered.  The jurisdictional decision comes after several days of hearings just on the jurisdictional issues held in 2011 and proceeds to address in detail the background to the decision, including an earlier extensive decision rendered in 2010; each of the claims of lack of jurisdiction; an extensive discussion of the burdens of proof on each defense; a summary of each side’s case; and the tribunal’s own analysis and determinations.  The decision also discusses the issue of costs of the proceeding and reiterates over many pages earlier decisions that the Panel had made on the issue of cost shifting.

At the end of all this the Panel now appears to be ready to move to the next phase of the expeditious dispute resolution technique that is arbitration and address other preliminary matters and then, possibly, the merits.  There do not appear to be dates set for these events.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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