British Caribbean Bank Limited v. Government of Belize (I)
PCA · Investment (ICSID and treaty) · Belize · 19 Dec 2014
Why it matters
This award is significant for its detailed analysis of what constitutes an 'investment' under a BIT, including loan agreements, and for applying the fair and equitable treatment standard to the conduct of domestic courts and executive actions. It also illustrates the interplay between domestic expropriation proceedings and international arbitration, and the calculation of compensation for expropriated debt instruments.
Summary
British Caribbean Bank Limited (BCB), a company incorporated in Turks and Caicos, held loan and security agreements with Belize Telemedia Limited (Telemedia) and Sunshine Holdings Limited (Sunshine), which owned shares in Telemedia. In 2009 and 2011, the Government of Belize (GOB) enacted legislation and orders to compulsorily acquire Telemedia and Sunshine, including BCB's interests in the loans. BCB initiated arbitration under the UK-Belize Bilateral Investment Treaty (BIT) and the UNCITRAL Rules, claiming expropriation and unfair treatment. The Tribunal, seated at the PCA, first dismissed GOB's objections to jurisdiction and admissibility, finding that BCB's loans constituted an 'investment' under the BIT and that the dispute was admissible despite parallel domestic proceedings. On the merits, the Tribunal held that GOB's actions amounted to an expropriation under Article 5 of the BIT, but BCB failed to prove the quantum of compensation for that claim. However, the Tribunal found that GOB breached the fair and equitable treatment standard under Article 2 by, inter alia, enacting legislation that targeted BCB's investments and by failing to provide a stable legal framework. The Tribunal awarded BCB compensation for the fair and equitable treatment breach, calculated as the outstanding principal and accrued interest on the loans, totaling US$44,797,442.86, plus pre-award interest and costs. The Tribunal also ordered BCB to assign its rights in the loans to GOB upon payment. The award is notable for its treatment of loans as protected investments and for its detailed analysis of the fair and equitable treatment standard in the context of sovereign debt expropriation.
The detail
Parties: British Caribbean Bank Limited v. Government of Belize (I)
Case number: PCA Case No. 2010-18
Outcome: The Tribunal found that Belize breached the UK-Belize BIT (fair and equitable treatment and expropriation) and ordered Belize to pay US$44,797,442.86 plus interest and costs.
Quantum: US$44,797,442.86 (plus pre-award interest and costs)
Applicable law: UK-Belize BIT (1982); UNCITRAL Rules (1976); Belize law
Issues in play: The case involved the collision between Belize's sovereign right to expropriate for public purpose and the investor's right to compensation under the BIT, particularly regarding the valuation of loan agreements and the fair and equitable treatment standard.
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