M. Meerapfel Söhne AG v. Central African Republic
ICSID · Investment (ICSID and treaty) · Central African Republic · 12 May 2011
Why it matters
This case is significant because it confirms that ICSID tribunals have jurisdiction over disputes arising from a protocol agreement between a state and a foreign investor, even in the absence of a bilateral investment treaty. It also illustrates the application of the Salini test for investment and the protection of shareholders' rights under the ICSID Convention.
Summary
M. Meerapfel Söhne AG (MMS), a Swiss company, invested in a tobacco company in the Central African Republic (CAR). Disputes arose over taxes and customs, leading to seizures and a halt in operations. In 2006, MMS and CAR signed a Protocol Agreement to settle the dispute, but CAR later requisitioned the company and denounced the agreement. MMS initiated ICSID arbitration under the Protocol's arbitration clause. CAR challenged jurisdiction, arguing no consent, no investment, and no dispute between a state and a foreign national. The Tribunal upheld jurisdiction, finding that the Protocol contained valid consent, MMS's contributions constituted an investment under the Salini test (capital, duration, risk, contribution to development), and the dispute was between CAR and a Swiss national. On the merits, the Tribunal found that CAR's actions, including requisition, denunciation of the Protocol, and failure to enforce court orders, amounted to expropriation without compensation and a breach of fair and equitable treatment. The Tribunal awarded damages for the expropriation and rejected CAR's counterclaims. The case underscores that a state's unilateral repudiation of a settlement agreement can violate international law.
The detail
Parties: M. Meerapfel Söhne AG v. Central African Republic
Case number: ICSID Case No. ARB/07/10
Outcome: The Tribunal found the Central African Republic in breach of the Protocol Agreement of 12 April 2006 and ordered it to pay damages to M. Meerapfel Söhne AG.
Quantum: EUR [...] and EUR [...] (amounts redacted in source)
Applicable law: ICSID Convention; Protocol Agreement of 12 April 2006; international law
Issues in play: The case involved the collision between the investor's rights under a settlement agreement (Protocol) and the host state's sovereign powers to tax and regulate, as well as issues of expropriation and fair and equitable treatment.
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