Aaron C. Berkowitz, Brett E. Berkowitz and Trevor B. Berkowitz (formerly Spence International Investments and others) v. Republic of Costa Rica, ICSID Case No. UNCT/13/2
ICSID · Investment (ICSID and treaty) · Costa Rica · 25 Oct 2016
Why it matters
This interim award is significant for its detailed analysis of CAFTA's temporal jurisdiction provisions, particularly Articles 10.18.1 and 10.1.3, which bar claims arising from measures known or should have been known before the treaty's entry into force. The tribunal's fact-specific, lot-by-lot approach and its treatment of constructive knowledge set a precedent for investor-state disputes involving pre-existing regulatory risks. The case also highlights the interplay between environmental protection and investor rights.
Summary
The case involves claims by U.S. investors against Costa Rica for alleged expropriation of 26 plots of land adjacent to the Las Baulas National Park, established to protect leatherback sea turtles. The investors argued that Costa Rica's creation and expansion of the park, and subsequent expropriation proceedings, violated CAFTA's expropriation and minimum standard of treatment provisions. Costa Rica objected to jurisdiction, arguing that many claims were time-barred because the investors knew or should have known of the alleged breaches before CAFTA entered into force (1 January 2009) or more than three years before the claim was filed (10 June 2013). The tribunal conducted a meticulous lot-by-lot analysis, examining when each property was acquired, when regulatory measures were taken, and what the investors knew or should have known. It found that for 18 lots, the claims were time-barred because the investors had constructive knowledge of the expropriatory measures before the relevant cutoff dates. For five lots (A40, B3, B8, SPG1, SPG2), the tribunal retained jurisdiction only over claims that the compensation assessed by Costa Rican courts was manifestly arbitrary or blatantly unfair under Article 10.5. For three lots (B5, B6, B7), the tribunal deferred a decision on jurisdiction pending further submissions on post-2013 court judgments. The award did not reach liability or damages, but set the stage for further proceedings on the limited remaining claims.
The detail
Parties: Aaron C. Berkowitz, Brett E. Berkowitz and Trevor B. Berkowitz (formerly Spence International Investments and others) v. Republic of Costa Rica, ICSID Case No. UNCT/13/2
Case number: italaw/cases/2110
Outcome: The Tribunal found it had no jurisdiction over most claims; for five lots, jurisdiction limited to minimum standard of treatment claims regarding compensation assessments; further proceedings reserved.
Applicable law: Dominican Republic-Central America-United States Free Trade Agreement (CAFTA) Chapter 10; UNCITRAL Arbitration Rules (2010); Costa Rican Expropriation Law No. 7495
Issues in play: CAFTA Articles 10.7 (expropriation) and 10.5 (minimum standard of treatment) collided with Costa Rica's sovereign right to expropriate for environmental purposes and the temporal jurisdictional limits under CAFTA Articles 10.18.1 and 10.1.3.
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