Joseph Houben v. Republic of Burundi
ICSID · Investment (ICSID and treaty) · Burundi · 12 Jan 2016
Why it matters
This case is notable for its application of the BIT's fair and equitable treatment and expropriation provisions to a land dispute where the investor's property was effectively taken through state inaction and complicity in usurpation. The tribunal's use of a 5% valuation based on the project's probability of success and its rejection of the investor's claimed interest rate are significant for damages calculations in investment arbitration.
Summary
Joseph Houben, a Belgian national, purchased a 14.6433-hectare plot in Bujumbura, Burundi in 2005 for residential development. In 2006, he contracted to sell one-third to the US Embassy, but discovered a 2002 opposition to transactions on the plot, placed by the prosecutor general at the request of a former co-owner. Although the opposition had lapsed, the prosecutor general reinstated it in 2007, causing the US Embassy to withdraw. Subsequently, unknown persons occupied and sold parts of the plot with alleged complicity of a local administrator. Houben sought help from Burundian authorities, but the situation worsened. He initiated ICSID arbitration under the Belgium-Luxembourg Economic Union-Burundi BIT. The tribunal found it had jurisdiction, rejecting Burundi's objections that Houben's acquisition was not an investment and that he had not exhausted local remedies. On the merits, the tribunal held that Burundi violated Article 3 (fair and equitable treatment) by failing to provide a stable legal framework and by its inaction against usurpation, and Article 4 (expropriation) by effectively depriving Houben of his investment without compensation. The tribunal awarded damages based on the plot's market value at the date of expropriation (June 15, 2010) but applied a 5% probability factor because the project was speculative, resulting in USD 209,340 plus interest at LIBOR 6-month + 2%.
The detail
Parties: Joseph Houben v. Republic of Burundi
Case number: ICSID Case No. ARB/13/7
Outcome: The Tribunal found Burundi violated Articles 3 and 4 of the Belgium-Luxembourg Economic Union-Burundi BIT and awarded Mr. Houben USD 209,340 plus interest.
Quantum: 209,340 USD
Applicable law: Belgium-Luxembourg Economic Union-Burundi BIT (1989), ICSID Convention, Burundian Civil Code and Land Code, customary international law
Issues in play: The case involved the interaction between Burundi's domestic land law (opposition to transactions, prescription periods) and the BIT's fair and equitable treatment and expropriation provisions, as well as the standard of indirect expropriation.
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.