BSG Resources Limited, BSG Resources (Guinea) Limited and BSG Resources (Guinea) SÀRL v. Republic of Guinea
ICSID · Investment (ICSID and treaty) · Guinea · 18 May 2022
Why it matters
This award is a landmark in investment arbitration for its unequivocal stance that claims based on rights obtained through corruption are inadmissible. It sets a high standard for tribunals to investigate corruption allegations, including through forensic document examination. The decision reinforces the principle that investors cannot benefit from illegal conduct and clarifies the burden of proof for corruption defenses.
Summary
The case arose from the revocation of mining rights for the Simandou and Zogota iron ore deposits in Guinea. The claimants, BSG Resources, initiated ICSID arbitration under the Guinean Investment Code, the Base Convention, the Mining Code, and the BOT Act. Guinea defended on the ground that the mining rights were obtained through corruption, including bribes to President Conté's fourth wife, Mamadie Touré, and other officials. The Tribunal appointed forensic experts to examine disputed documents. After extensive proceedings, the Tribunal found that the claimants had engaged in corrupt practices, including payments to intermediaries and influence peddling. Consequently, the Tribunal held that the claims were inadmissible because they were based on rights acquired through corruption. The Tribunal also dismissed Guinea's counterclaims as inadmissible. The award allocated costs heavily against the claimants, ordering them to pay 80% of the ICSID costs and 80% of Guinea's legal fees. The decision underscores that corruption taints the entire investment and bars any relief, even if the state also acted wrongfully.
The detail
Parties: BSG Resources Limited, BSG Resources (Guinea) Limited and BSG Resources (Guinea) SÀRL v. Republic of Guinea
Case number: ICSID Case No. ARB/14/22
Outcome: The Tribunal dismissed the claims as inadmissible because the mining rights were obtained through corruption. The counterclaims were also dismissed as inadmissible. Claimants ordered to pay 80% of ICSID costs and 80% of Respondent's costs.
Quantum: USD 5,647,428 (USD 301,807 ICSID costs + USD 5,345,621 legal costs)
Applicable law: ICSID Convention, Guinean Investment Code, Base Convention, Guinean Mining Code, BOT Act, Guinean law on corruption, international law on corruption
Issues in play: The case involved a collision between the protection of foreign investments under investment treaties and the prohibition of corruption under Guinean and international law. The Tribunal had to determine whether mining rights obtained through bribery could be enforced.
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