Marion Unglaube v. Republic of Costa Rica
ICSID · Investment (ICSID and treaty) · Costa Rica · 16 May 2012
Why it matters
This case is a significant example of indirect expropriation in the context of environmental regulation. It clarifies that while states may regulate for public purposes, they must compensate investors when regulations deprive them of the use and value of their property. The award also illustrates the application of the Germany-Costa Rica BIT and the calculation of interest using U.S. Treasury rates.
Summary
Marion and Reinhard Unglaube, German nationals, invested in land in Costa Rica's Guanacaste province to develop an ecotourism project. The land was near Playa Grande, a nesting site for endangered leatherback turtles. Costa Rica planned to create Las Baulas National Marine Park to protect the turtles. Over time, the government imposed restrictions on development within a buffer zone around the park, culminating in a 2008 Constitutional Court order that effectively halted construction and required environmental studies. The Unglaubes claimed that these measures amounted to expropriation and violated the fair and equitable treatment standard under the Germany-Costa Rica BIT. The ICSID tribunal found that Costa Rica's actions, particularly the creation of a 75-meter strip within the park that included part of Marion Unglaube's property, constituted indirect expropriation. The tribunal awarded Marion Unglaube US$ 3.1 million plus interest, totaling US$ 4,065,900.33, for the loss of that strip. However, it dismissed claims regarding other properties and Reinhard Unglaube's claims, finding no expropriation or unfair treatment. The tribunal also ordered each party to bear its own costs and share tribunal expenses equally. The case underscores that environmental regulation can lead to compensable expropriation if it deprives an investor of property rights.
The detail
Parties: Marion Unglaube v. Republic of Costa Rica
Case number: ICSID Case No. ARB/08/1
Outcome: Costa Rica ordered to pay Marion Unglaube US$ 4,065,900.33 (including interest) for expropriation of a 75-meter strip of her property; all other claims dismissed.
Quantum: US$ 4,065,900.33
Applicable law: Germany-Costa Rica BIT (1994); ICSID Convention; Costa Rican law; international law
Issues in play: The case involved a conflict between the investor's property rights under the BIT and Costa Rica's environmental protection measures to create a national park for leatherback turtles. The tribunal balanced the state's right to regulate against the obligation to compensate for 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.