Grenada Private Power Limited and WRB Enterprises, Inc. v. Grenada
ICSID · Investment (ICSID and treaty) · Grenada · 29 Mar 2020
Why it matters
This case clarifies the enforceability of contractual 'put' options in long-term investment agreements against sovereign states, even when the compensation formula yields above-market value. It also addresses the limits of the 'wilful malfeasance' defence and the interaction between contractual rights and sovereign regulatory authority in the electricity sector.
Summary
In 1994, Grenada privatized its electricity utility GRENLEC by selling a controlling interest to GPP and WRB. The Share Purchase Agreement included a 'put' option allowing the investors to require the government to repurchase their shares at a price calculated under a statutory formula (Second Schedule) if certain events occurred. In 2016, a new government enacted legislation restructuring the electricity sector, which the investors claimed triggered the repurchase obligation. Grenada refused, arguing the repurchase provisions were void as a penalty, unconstitutional, and that the investors had committed wilful malfeasance. The ICSID tribunal rejected Grenada's defences, finding the SPA valid and the repurchase obligation enforceable. It held that the 2016 legislation constituted a repurchase event, and that Grenada failed to prove wilful malfeasance. The tribunal awarded compensation under the Second Schedule formula, but adjusted certain items (e.g., deferred taxes, hurricane insurance reserve) to avoid overcompensation. The award included pre- and post-award interest and costs. The decision underscores the importance of clear contractual terms in investment agreements and the high bar for states to avoid repurchase obligations based on alleged investor misconduct.
The detail
Parties: Grenada Private Power Limited and WRB Enterprises, Inc. v. Grenada
Case number: ICSID Case No. ARB/17/13
Outcome: Claimants succeeded; Tribunal ordered Grenada to pay compensation under the Second Schedule formula, with adjustments, plus pre- and post-award interest and costs.
Quantum: EC $182,150,000 (claimed); awarded amount less than claimed after adjustments
Applicable law: Share Purchase Agreement (1994), Electricity Supply Act 1994, ICSID Convention, international law, Grenadian law
Issues in play: Contractual repurchase obligation vs. sovereign regulatory power; validity of Second Schedule compensation formula under Grenadian law and constitution; defence of wilful malfeasance.
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