Energía y Renovación Holding, S.A. v. Republic of Guatemala
ICSID · Investment (ICSID and treaty) · Guatemala · 31 Mar 2025
Why it matters
This award is significant because it clarifies the scope of the full protection and security obligation under CAFTA-DR, holding that a host state may be liable for failing to prevent and respond to violent attacks by non-state actors against a foreign investment, even when the state has taken some measures. The tribunal's detailed analysis of due diligence and the attribution of omissions to the state provides guidance for future investment treaty claims involving physical violence.
Summary
Energía y Renovación Holding, S.A., a Panamanian company, invested in three Guatemalan subsidiaries to develop hydroelectric projects (Pojom II, San Andrés, and Innovación Noroccidente). Between 2015 and 2019, the projects faced repeated violent attacks by local communities and unknown individuals, including destruction of equipment, blockades, and threats. The investor claimed Guatemala failed to provide full protection and security (FPS) and fair and equitable treatment (FET) under Article 10.06 of the CAFTA-DR. Guatemala objected to jurisdiction on multiple grounds, arguing that the claimant was not an investor, the investment was illegal, and the claims were time-barred. The tribunal (by majority) rejected all jurisdictional objections, finding that Energía y Renovación had made a qualifying investment and that the claims were timely. On the merits, the tribunal held that Guatemala breached its FPS obligation because it knew or should have known of the risks of violence, had sufficient resources to protect the investment, but failed to take adequate preventive and responsive measures. The FET claim was subsumed within the FPS analysis. The tribunal dismissed expropriation and national treatment claims. It awarded US$64,504,000 in damages (based on the fair market value of the investment as of the last attack), plus pre-award interest at the US 5-year Treasury rate and post-award interest at Prime + 2%, compounded annually. Guatemala was also ordered to pay half of the claimant's costs and all tribunal costs. The award was issued on 31 March 2025, with a dissenting opinion by Prof. Vinuesa.
The detail
Parties: Energía y Renovación Holding, S.A. v. Republic of Guatemala
Case number: ICSID Case No. ARB/21/56
Outcome: Guatemala violated Article 10.06 of the CAFTA-DR (full protection and security and fair and equitable treatment); ordered to pay US$64,504,000 in damages plus interest and costs.
Quantum: US$64,504,000
Applicable law: Tratado de Libre Comercio entre Centroamérica y Panamá (CAFTA-DR), ICSID Convention, international law
Issues in play: The case involved the standard of full protection and security (whether Guatemala failed to exercise due diligence to protect the investment from violent attacks by third parties) and fair and equitable treatment (whether the investor's legitimate expectations were frustrated).
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