Banro American Resources, Inc. and Société Aurifère du Kivu et du Maniema S.A.R.L. v. Democratic Republic of the Congo
ICSID · Investment (ICSID and treaty) · Democratic Republic of the Congo · 1 Sep 2000
Why it matters
This case is a landmark on the nationality requirement for ICSID jurisdiction and the prohibition against combining diplomatic protection with ICSID arbitration. It established that an investor cannot use a subsidiary's nationality to gain ICSID access while the parent's home state (non-ICSID party) provides diplomatic protection, preserving the integrity of the ICSID system's depoliticization objective.
Summary
Banro American Resources, a US company, and its Congolese subsidiary SAKIMA brought an ICSID claim against the Democratic Republic of the Congo under a mining convention that provided for ICSID arbitration. The convention named Banro Resource, a Canadian company, as the investor. Canada was not an ICSID party. The Tribunal faced two jurisdictional issues: (1) whether Banro American, a US national, could claim under a clause that only mentioned Banro Resource; and (2) whether Banro Resource, as the real party in interest, could access ICSID despite Canada not being an ICSID party. The Tribunal rejected both approaches. It held that Banro American lacked consent because the clause only covered Banro Resource. Piercing the corporate veil to treat Banro Resource as claimant would fail the nationality requirement since Canada was not an ICSID party. The Tribunal emphasized that allowing the claim would undermine the ICSID system's purpose of depoliticizing investment disputes by excluding diplomatic protection. It noted that Canada had provided diplomatic protection to Banro Resource, and permitting simultaneous ICSID arbitration would violate Articles 26 and 27 of the ICSID Convention. The Tribunal therefore declined jurisdiction by a majority.
The detail
Parties: Banro American Resources, Inc. and Société Aurifère du Kivu et du Maniema S.A.R.L. v. Democratic Republic of the Congo
Case number: ICSID Case No. ARB/98/7
Outcome: The Tribunal declined jurisdiction, finding it lacked competence to hear the dispute.
Applicable law: ICSID Convention, Mining Convention between Banro Resource and DRC
Issues in play: The case involved the nationality requirement under Article 25 of the ICSID Convention and the prohibition on combining diplomatic protection with ICSID arbitration under Article 27. The Tribunal had to determine whether a Canadian parent company could use a US subsidiary to access ICSID while Canada, not an ICSID party, provided diplomatic protection.
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