Inversión y Gestión de Bienes, IGB, S.L. and IGB18 Las Rozas, S.L. v. Kingdom of Spain

Why it matters

This case is notable for its jurisdictional decision affirming that indirect investments by a national of a non-EU state (Venezuela) in an EU member state (Spain) are protected under the Spain-Venezuela BIT, and that ICSID retains jurisdiction despite Venezuela's denunciation of the ICSID Convention. The award also clarifies that EU law does not preclude ICSID jurisdiction in such intra-EU disputes involving a third-country national. The case is a key reference for the 'foreign control' test under Article 25(2)(b) of the ICSID Convention.

Summary

The case concerns a dispute between two Spanish companies, IGB and IGB18, which were indirectly controlled by a Venezuelan national, and the Kingdom of Spain. The claimants alleged that Spain violated the Spain-Venezuela Bilateral Investment Treaty (BIT) through actions of the Madrid City Council and the Community of Madrid regarding a real estate development project. The project involved the purchase of land in Las Rozas, Madrid, for a residential and commercial development. The claimants argued that the authorities imposed unlawful restrictions, including the reclassification of land as green zones and the denial of necessary permits, which rendered the project unviable and led to the foreclosure of the property. Spain raised several jurisdictional objections: first, that the claimants were not 'investors' under the BIT because the investment was made indirectly through Spanish companies; second, that the dispute was essentially intra-EU and thus ICSID lacked jurisdiction; and third, that Venezuela's denunciation of the ICSID Convention deprived the Centre of jurisdiction. The Tribunal rejected all objections. It held that the BIT's definition of investment was broad and included indirect investments, and that the Venezuelan national's control over the Spanish companies qualified as an investment. On the intra-EU issue, the Tribunal noted that the dispute was between Spain and a Venezuelan investor, not between two EU nationals, so EU law did not apply. Regarding Venezuela's denunciation, the Tribunal found that the claimants' right to access ICSID arose before the denunciation took effect, so jurisdiction was preserved. On the merits, the Tribunal analyzed the facts and concluded that Spain had not breached the BIT. It found that the claimants failed to prove that the authorities' actions were arbitrary, discriminatory, or expropriatory. The Tribunal noted that the land reclassification and permit denials were based on legitimate urban planning considerations and that the claimants had not exhausted local remedies. The Tribunal also found that the foreclosure was a private matter between the claimants and their creditors, not attributable to Spain. Consequently, the Tribunal dismissed all claims and ordered the claimants to bear the entire costs of the arbitration, including Spain's legal fees and expenses.

The detail

Parties: Inversión y Gestión de Bienes, IGB, S.L. and IGB18 Las Rozas, S.L. v. Kingdom of Spain

Case number: ICSID Case No. ARB/12/17

Outcome: The Tribunal dismissed all claims and ordered the Claimants to pay all costs of the arbitration, including Spain's legal fees and expenses.

Applicable law: ICSID Convention; Agreement between the Republic of Venezuela and the Kingdom of Spain on the Reciprocal Promotion and Protection of Investments (BIT); Spanish law

Issues in play: The case involved the definition of 'investment' and 'investor' under the BIT and ICSID Convention, particularly whether indirect control by a Venezuelan national over Spanish companies qualified as a protected investment. Spain argued that the investment must be direct, but the Tribunal rejected this, finding that the BIT's broad definition included indirect investments.

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