Gambrinus, Corp. v. Bolivarian Republic of Venezuela
ICSID · Investment (ICSID and treaty) · Venezuela · 15 Jun 2015
Why it matters
This case is a landmark on the requirement that an investment must be made in compliance with the host state's laws and contractual conditions. The Tribunal strictly enforced a contractual provision requiring cash consideration for share transfers, holding that non-compliance deprived the claimant of protected investment status. It reinforces the principle that tribunals will scrutinize the legality of the investment acquisition, even if the claimant acted in good faith.
Summary
Gambrinus Corporation, a Barbados company, claimed that Venezuela expropriated its 10% stake in Fertinitro, a Venezuelan fertilizer producer, without compensation. Gambrinus acquired the shares from Inv. Polar in 2008 via a share-for-share exchange. Venezuela objected to jurisdiction, arguing that the transfer violated the Fertinitro Joint Investors' Agreement (JIA), which required transfers for cash or cash equivalents. The Tribunal agreed, finding that the share-for-share consideration was not cash or a cash equivalent, and thus the transfer was void under the JIA. Consequently, Gambrinus never owned a protected investment under the BIT at the time of the alleged expropriation in 2010. The Tribunal declined jurisdiction, dismissing all claims. It also rejected Venezuela's other objections (ratione personae and ratione temporis) but found the lack of a valid investment dispositive. Each party bore its own costs and shared tribunal costs equally.
The detail
Parties: Gambrinus, Corp. v. Bolivarian Republic of Venezuela
Case number: ICSID Case No. ARB/11/31
Outcome: The Tribunal declined jurisdiction; each party bears its own costs and shares tribunal costs equally.
Applicable law: Agreement between Barbados and Venezuela for the Promotion and Reciprocal Protection of Investments (1994 BIT); ICSID Convention; Venezuelan law; Joint Investors' Agreement (JIA) of Fertinitro.
Issues in play: The core issue was whether Gambrinus validly acquired shares in Fertinitro under the JIA, which required transfers for cash or cash equivalents. The Tribunal found the share-for-share consideration violated this condition, rendering the transfer void and depriving Gambrinus of an 'investment' under the BIT.
Read the full decision at italaw ↗
Locus Standi links to the source decision and publishes its own plain-language summary. It does not reproduce the text of the award.