Alejandro Diego Díaz Gaspar v. Republic of Costa Rica
ICSID · Investment (ICSID and treaty) · Costa Rica · 29 Jun 2022
Why it matters
This case is notable for its application of the fair and equitable treatment standard in the context of sanitary and environmental regulation. The tribunal found that while the administration acted arbitrarily in ordering a plant closure, the swift correction by domestic courts prevented a treaty violation. It also held that ministerial statements to the press could breach the minimum standard of treatment, but no damages were proven. The case illustrates the interplay between investor protection and the state's police powers, and the role of domestic judicial remedies in curing state misconduct.
Summary
Alejandro Diego Díaz Gaspar, a Spanish investor, acquired a poultry processing plant in Costa Rica in 2013. In 2016, Costa Rican authorities issued sanitary orders, suspended the plant's veterinary operating certificate, and ordered its closure due to alleged wastewater and environmental violations. The investor claimed these measures, along with public statements by the Health Minister, violated the fair and equitable treatment (FET) standard, the promotion and admission obligation, non-discrimination, national treatment, and expropriation provisions of the Spain-Costa Rica BIT. The tribunal, by majority, found that the administrative actions (replacing a sanitary order, ordering technical closure of the wastewater system, suspending the certificate, and closing the plant on 12, 15, and 17 February 2016) were arbitrary and inconsistent with FET. However, these violations were promptly and effectively corrected by the San José Administrative Court on 19 February 2016, which suspended the closure order. The investor's decision to keep the plant closed after that date was not attributable to the state. The tribunal also found that the Health Minister's statements to the press violated FET, but the investor failed to prove they caused any damage. All other claims (including expropriation) were dismissed. The tribunal rejected the claims in their entirety and ordered each party to bear its own legal costs, with arbitration costs split equally.
The detail
Parties: Alejandro Diego Díaz Gaspar v. Republic of Costa Rica
Case number: ICSID Case No. ARB/19/13
Outcome: The Tribunal rejected all claims. Each party bears its own legal costs; arbitration costs split equally.
Applicable law: Agreement for the Promotion and Reciprocal Protection of Investments between Spain and Costa Rica (1997); ICSID Convention; Costa Rican environmental and sanitary laws.
Issues in play: The case involved a collision between the investor's right to fair and equitable treatment under the bilateral investment treaty and Costa Rica's regulatory powers to enforce environmental and sanitary standards. The tribunal assessed whether arbitrary administrative actions and ministerial statements violated the treaty, and whether the investor's legitimate expectations were frustrated.
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