Lighthouse Corporation Pty Ltd and Lighthouse Corporation Ltd, IBC v. Democratic Republic of Timor-Leste
ICSID · Investment (ICSID and treaty) · Timor-Leste · 22 Dec 2017
Why it matters
This case clarifies the strict requirements for foreign investors to access ICSID arbitration under Timor-Leste's Foreign Investment Law. It underscores that contractual consent to ICSID must be clear and that compliance with domestic investment registration procedures is mandatory. The decision also highlights the importance of formal state approval for special investment agreements, reinforcing the principle that investment treaty protections are not automatically available to all foreign suppliers.
Summary
Lighthouse Corporation Pty Ltd (Australia) and Lighthouse Corporation Ltd, IBC (Seychelles) initiated ICSID arbitration against Timor-Leste under a Fuel Supply Agreement for the supply of fuel and generators. The Claimants argued that the agreement, along with the Timor-Leste Foreign Investment Law (FIL), provided consent to ICSID jurisdiction. The Respondent objected, contending that the Claimants were not 'foreign investors' under the FIL and that the agreement was not a 'special investment agreement' (SIA) because it lacked approval by the Council of Ministers. The Tribunal agreed with the Respondent. It held that the FIL requires a foreign investor certificate and that the Fuel Supply Agreement did not meet the SIA requirements, as it was not endorsed by the Council of Ministers. Additionally, the Tribunal found that the contractual arbitration clause in the Standard Terms was not incorporated into the agreement. Consequently, the Tribunal lacked jurisdiction. The Claimants were ordered to bear the arbitration costs and pay USD 1,300,000 towards the Respondent's legal fees.
The detail
Parties: Lighthouse Corporation Pty Ltd and Lighthouse Corporation Ltd, IBC v. Democratic Republic of Timor-Leste
Case number: ICSID Case No. ARB/15/2
Outcome: The Tribunal lacked jurisdiction; Claimants ordered to pay USD 273,434.26 in arbitration costs and USD 1,300,000 in Respondent's legal fees.
Quantum: USD 1,573,434.26
Applicable law: Timor-Leste Foreign Investment Law (Law No 05/2005), ICSID Convention, and contractual terms (Fuel Supply Agreement with reference to Standard Terms and General Terms and Conditions).
Issues in play: The dispute centered on whether the Fuel Supply Agreement constituted a 'special investment agreement' under the FIL and whether the Claimants qualified as 'foreign investors' entitled to ICSID arbitration. The Tribunal found the agreement lacked Council of Ministers approval and the Claimants lacked a foreign investor certificate.
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