Antoine Goetz et consorts v. République du Burundi (I)
ICSID · Investment (ICSID and treaty) · Burundi · 10 Feb 1999
Why it matters
This case is a landmark ICSID decision on the protection of foreign investors' legitimate expectations under a bilateral investment treaty. It established that a host state's unilateral revocation of investment incentives granted to a foreign investor may breach the fair and equitable treatment standard, even if the state acts within its sovereign regulatory powers. The case also illustrates the use of amicable settlement during arbitration proceedings, resulting in a consent award that incorporated the parties' agreement.
Summary
The case arose from a dispute between Belgian shareholders of AFFIMET, a Burundian company, and the Republic of Burundi. In 1992, Burundi created a free zone regime offering tax and customs exemptions to promote exports and attract investment. AFFIMET obtained a free zone certificate in 1993 for gold refining and precious metals processing. However, due to internal disagreements among government ministries, the certificate was suspended in August 1993, reinstated in January 1994, and finally revoked in May 1995 by a ministerial order that added mining and refining activities to the list of ineligible traditional activities. The claimants, Belgian nationals holding 999 of 1,000 shares, initiated ICSID arbitration under the Belgium-Luxembourg-Burundi bilateral investment treaty (BIT), alleging that the revocation violated the BIT's fair and equitable treatment and expropriation provisions. The tribunal was constituted in 1996. During the proceedings, the parties reached a settlement in December 1998, which was incorporated into the award as a consent award. Under the settlement, Burundi agreed to pay AFFIMET USD 2,989,636 in monthly installments for reimbursement of duties and taxes, and AFFIMET released all claims. The tribunal also ordered each party to bear its own costs and share ICSID expenses equally. The award was rendered on 10 February 1999.
The detail
Parties: Antoine Goetz et consorts v. République du Burundi (I)
Case number: ICSID Case No. ARB/95/3
Outcome: The parties reached a settlement, incorporated into the award. Burundi agreed to pay AFFIMET USD 2,989,636 in installments, and AFFIMET released all claims.
Quantum: USD 2,989,636
Applicable law: Convention between the Belgo-Luxembourg Economic Union and the Republic of Burundi concerning the encouragement and reciprocal protection of investments (1989); ICSID Convention; Burundian law (décret-loi on free zone regime).
Issues in play: The case involved the collision between Burundi's sovereign right to regulate its free zone regime and the protection of foreign investors' legitimate expectations under the bilateral investment treaty. The key issue was whether the withdrawal of the free zone certificate violated the fair and equitable treatment standard.
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