Campos de Pesé, S.A. v. Republic of Panama
ICSID · Investment (ICSID and treaty) · Panama · 1 Mar 2024
Why it matters
This case clarifies the standard for establishing 'control' under ICSID Convention Article 25(2)(b) when a claimant is a locally incorporated company owned by a foreign holding company. The Tribunal required proof of actual control by Italian nationals, rejecting arguments based on beneficial ownership or indirect shareholding without evidence of voting control. It also addressed procedural misconduct in document production and witness attendance, awarding costs against the claimant.
Summary
Campos de Pesé, a Panamanian company, initiated ICSID arbitration against Panama under the Italy-Panama BIT, alleging expropriation and unfair treatment related to biofuel regulations. Panama objected to jurisdiction ratione personae, arguing that Campos de Pesé was not a 'national of another Contracting State' because it was controlled by non-Italian nationals. The BIT extends protection to companies incorporated in the host state that are controlled by nationals of the other state. Campos de Pesé claimed it was controlled by Italian nationals through its indirect parent, SER Holding Company Ltd (BVI), whose shareholders included Italian individuals. The Tribunal bifurcated the proceedings to address jurisdiction. After extensive briefing and a hearing, the Tribunal found that Campos de Pesé failed to prove that Italian nationals controlled it. The Tribunal analyzed control under Panamanian and BVI law, focusing on share ownership and board composition. It determined that the majority of SER's shares were held by non-Italian entities and individuals, and that the board of directors was not controlled by Italians. The Tribunal also noted the non-attendance of key witnesses (Carlos Pellas and Ernesto Palazio) at the hearing, which weakened Claimant's case. Consequently, the Tribunal declined jurisdiction and ordered Campos de Pesé to bear all costs, including Respondent's legal fees and arbitration costs, due to its unsuccessful claim and procedural misconduct.
The detail
Parties: Campos de Pesé, S.A. v. Republic of Panama
Case number: ICSID Case No. ARB/20/19
Outcome: The Tribunal declined jurisdiction ratione personae; Claimant bears all costs and Respondent's expenses.
Applicable law: Italy-Panama BIT (1995); ICSID Convention; Panamanian law; BVI law
Issues in play: The dispute centered on whether Claimant, a Panamanian company, was 'controlled by Italian nationals' to qualify as a national of another Contracting State under Article 25(2)(b) of the ICSID Convention and Article I(2) of the BIT. The Tribunal examined control through shareholding and board composition.
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