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American Manufacturing & Trading, Inc. v. Republic of Zaire (ICSID)

Why it matters

This is one of the first ICSID awards to interpret the 'full protection and security' standard in a BIT. It established that a host state is liable for failing to take reasonable measures to protect foreign investments from damage by private actors during civil unrest, even if the state did not directly cause the harm. The case set a precedent for state responsibility in situations of internal conflict.

Summary

American Manufacturing & Trading, Inc. (AMT), a US company, invested in Zaire (now Democratic Republic of the Congo) through a local subsidiary, SIACONGO, which operated a battery manufacturing plant. In September 1991, widespread looting and destruction occurred during civil unrest in Kinshasa. Soldiers and civilians ransacked the plant, causing extensive damage. AMT sought compensation from Zaire under the US-Zaire Bilateral Investment Treaty (BIT), which required Zaire to provide 'full protection and security' to investments. Zaire argued that the unrest was force majeure and that it had taken reasonable steps to restore order. The ICSID tribunal, composed of Judge Kéba Mbaye (President), Mr. Antoine Kassis, and Mr. Dominique Schmidt, held that Zaire had failed to take adequate measures to protect the investment. The tribunal found that Zaire's actions were insufficient and that the state was liable for the damage. It awarded AMT US$9 million plus interest, calculated based on the value of the destroyed assets. The decision is significant for establishing that the full protection and security standard imposes an objective duty of vigilance on host states, and that civil unrest does not automatically excuse state liability if the state could have taken reasonable preventive measures.

The detail

Parties: American Manufacturing & Trading, Inc. v. Republic of Zaire

Case number: ICSID Case No. ARB/93/1

Outcome: Tribunal found Zaire liable for failing to protect AMT's investment and awarded US$9 million plus interest.

Quantum: US$9,000,000 plus interest

Applicable law: US-Zaire Bilateral Investment Treaty (BIT); ICSID Convention; international law

Issues in play: The BIT's full protection and security clause versus Zaire's defense of force majeure due to civil unrest and looting.

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