Consortium RFCC v. Royaume du Maroc
ICSID · Investment (ICSID and treaty) · Morocco · 22 Dec 2003
Why it matters
This case is a landmark in investment arbitration for clarifying that a breach of contract by a state entity does not automatically constitute a violation of a bilateral investment treaty. The tribunal emphasized that treaty protections require specific state conduct beyond ordinary contractual disputes, setting a high bar for investors seeking to elevate contract claims to treaty claims.
Summary
Consortium RFCC, a group of Italian companies, entered into a contract with the Moroccan highway authority (ADM) to build a section of the Rabat-Fès highway. Disputes arose over delays, cost overruns, and penalties. The Consortium filed an ICSID arbitration against Morocco under the Italy-Morocco BIT, alleging discrimination, unfair treatment, and expropriation. The tribunal first upheld jurisdiction over treaty claims but not pure contract claims. On the merits, it found that the Consortium's grievances, such as non-award of a contract lot, refusal to pay extra costs, application of penalties, and calling of bank guarantees, were contractual disputes, not treaty violations. The tribunal held that Morocco did not breach the BIT's fair and equitable treatment, non-discrimination, or expropriation provisions. It rejected all claims, noting that the Consortium failed to prove any specific state conduct that went beyond ordinary contractual administration. The decision underscores that investment treaties do not insure against all business risks.
The detail
Parties: Consortium RFCC v. Royaume du Maroc
Case number: ICSID Case No. ARB/00/6
Outcome: The Tribunal rejected all claims of Consortium RFCC and ordered each party to bear its own legal costs and share arbitration costs equally.
Applicable law: Italy-Morocco Bilateral Investment Treaty (1990); ICSID Convention; Moroccan law
Issues in play: The case involved the distinction between contractual breaches and treaty violations under the BIT, particularly the fair and equitable treatment standard, non-discrimination, and expropriation.
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