Antoine Abou Lahoud and Leila Bounafeh-Abou Lahoud v. Democratic Republic of the Congo
ICSID · Investment (ICSID and treaty) · Democratic Republic of the Congo · 7 Feb 2014
Why it matters
This case is significant for its detailed analysis of the definition of investment under the ICSID Convention and the DRC's investment code, particularly regarding the requirement of contribution to the host state's economic development. It also clarifies the attribution of conduct of local authorities to the state and the application of the fair and equitable treatment standard in the context of expropriation by local decree.
Summary
The dispute arose from the eviction of the claimants' company, IMPOREX, from its premises in Kinshasa on 19 May 2005, following a requisition order by the provincial governor. The claimants, Lebanese nationals, owned IMPOREX, which operated in electricity, heavy machinery, vehicles, spare parts, and timber. They alleged that the DRC violated the fair and equitable treatment standard and expropriated their investment without compensation, contrary to the DRC's New Investment Code (NCI) and international law. The DRC challenged jurisdiction, arguing that the claimants had no investment under the NCI or the ICSID Convention, that the investment was illegal, and that the dispute was not directly related to the investment. The Tribunal, in its Decision on Jurisdiction of 16 February 2012, joined these issues to the merits. On the merits, the Tribunal found that the claimants had made investments under both the NCI and the ICSID Convention, as they contributed capital, assumed risks, and their activities contributed to the DRC's economic development. The Tribunal rejected the DRC's illegality arguments, finding that the claimants had the necessary authorizations. On attribution, the Tribunal held that the acts of the provincial governor were attributable to the DRC. The Tribunal found that the DRC violated the fair and equitable treatment standard by failing to provide a stable legal framework and by evicting the claimants without due process. It also found that the requisition order amounted to an expropriation without public purpose or compensation. The Tribunal awarded USD 1,728,194 for material losses, including the value of destroyed goods, loss of business, and loss of goodwill, but denied moral damages. The Tribunal allocated 75% of arbitration costs to the DRC and 50% of the claimants' legal fees to the DRC.
The detail
Parties: Antoine Abou Lahoud and Leila Bounafeh-Abou Lahoud v. Democratic Republic of the Congo
Case number: ICSID Case No. ARB/10/4
Outcome: The Tribunal found that the DRC violated its obligations under Articles 25 and 26 of the New Investment Code and awarded the Claimants USD 1,728,194 in damages for material harm, plus simple interest at LIBOR+2 from 19 May 2005 until full payment.
Quantum: USD 1,728,194
Applicable law: ICSID Convention; Law No. 004/2002 of 21 February 2002 (New Investment Code of the DRC); international law
Issues in play: The case involved the definition of 'investment' under the ICSID Convention and the DRC's New Investment Code, and the legality of the investment under domestic law. The Tribunal also addressed the attribution of acts of local authorities to the State and the standard of fair and equitable treatment.
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