Bernardus Henricus Funnekotter and others v. Republic of Zimbabwe
ICSID · Investment (ICSID and treaty) · Zimbabwe · 22 Apr 2009
Why it matters
This case is a landmark ICSID award on expropriation arising from Zimbabwe's Fast Track Land Reform Programme. It affirmed that non-discriminatory land reform does not excuse the obligation to pay prompt, adequate, and effective compensation under a BIT. The Tribunal rejected Zimbabwe's argument that compensation was not required because the former colonial power should pay, and it set a precedent for valuing agricultural land and awarding compound interest.
Summary
The case concerns 13 Dutch nationals who owned commercial farms in Zimbabwe. Beginning in 2000, Zimbabwe's government initiated a Fast Track Land Reform Programme, leading to invasions by war veterans and eventual acquisition of the farms without compensation. The claimants sought arbitration under the Netherlands-Zimbabwe BIT. The Tribunal found that Zimbabwe had expropriated the investments without complying with the BIT's requirement of prompt, adequate, and effective compensation. It rejected Zimbabwe's defense that compensation was not required under its constitutional amendments. The Tribunal valued the farms based on their fair market value as going concerns, using comparable sales and income capitalization methods, and awarded EUR 8,220,000 in total, plus 10% interest compounded semi-annually from the dates of dispossession. The award is significant for its detailed analysis of valuation in expropriation cases and its rejection of the 'no compensation' argument based on domestic constitutional changes.
The detail
Parties: Bernardus Henricus Funnekotter and others v. Republic of Zimbabwe
Case number: ICSID Case No. ARB/05/6
Outcome: The Tribunal found Zimbabwe breached Article 6(c) of the Netherlands-Zimbabwe BIT and ordered Zimbabwe to pay EUR 8,220,000 in damages plus 10% interest compounded semi-annually from specified dates, and to bear the costs of the Tribunal and ICSID.
Quantum: EUR 8,220,000
Applicable law: Agreement on Encouragement and Reciprocal Protection of Investments Between the Republic of Zimbabwe and the Kingdom of the Netherlands (1996); ICSID Convention; Land Acquisition Act of Zimbabwe
Issues in play: The BIT's expropriation clause (Article 6) collided with Zimbabwe's land reform program, which provided for compulsory acquisition without compensation. The Tribunal had to determine whether the expropriation was lawful under the BIT and whether compensation was due.
Read the full decision at italaw ↗
Locus Standi links to the source decision and publishes its own plain-language summary. It does not reproduce the text of the award.