CDC Group plc v. Republic of Seychelles
ICSID · Investment (ICSID and treaty) · Seychelles · 17 Dec 2003
Why it matters
This case is a clear example of ICSID jurisdiction over loan guarantees as investments, and it reaffirms that a sovereign guarantor cannot avoid payment by alleging reliance on the lender's appraisal or unequal bargaining power. The Tribunal strictly applied the contractual terms, emphasizing that a lender's own assessment does not give rise to a duty of care or implied representation to the borrower.
Summary
CDC Group plc, a UK development finance institution, lent money to the Public Utilities Corporation (PUC) of Seychelles under two loan agreements (1990 and 1993), guaranteed by the Republic of Seychelles. PUC defaulted, and CDC demanded payment under the guarantees. The Republic initially objected to ICSID jurisdiction, arguing the loans were not 'investments' under the ICSID Convention, but later withdrew that objection. At the hearing, the Republic argued that CDC had misrepresented the viability of a gas turbine project, owed a duty of care in its appraisal, and that the guarantee was an unfair contract due to inequality of bargaining power. The Tribunal rejected all defences. It found no evidence that CDC made any representation about the project's viability; CDC's internal appraisal was for its own lending decision. The unconditional guarantee was a standard commercial term, and the Republic had not sought to rescind the contract. The Tribunal ordered the Republic to pay the outstanding principal (£1,771,096.75), interest (£672,915.45 up to August 25, 2003, plus daily interest thereafter), and £100,000 in costs.
The detail
Parties: CDC Group plc v. Republic of Seychelles
Case number: ICSID Case No. ARB/02/14
Outcome: The Tribunal ordered the Republic to pay CDC principal of £1,771,096.75, interest of £672,915.45 (plus daily interest from August 25, 2003), and costs of £100,000.
Quantum: £2,446,701.38 (principal and interest as of August 25, 2003) plus ongoing interest and costs
Applicable law: ICSID Convention; two loan agreements and guarantees governed by English law (implied); no specific treaty cited.
Issues in play: The Republic raised defences based on misrepresentation, duty of care, and inequality of bargaining power, but the Tribunal held that a lender's internal appraisal does not create a duty to the borrower, and the unconditional guarantee was a valid commercial term.
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