Omega Engineering LLC and Oscar Rivera v. Republic of Panama
ICSID · Investment (ICSID and treaty) · Panama · 14 Oct 2022
Why it matters
This award is significant for its detailed analysis of corruption allegations in investment treaty arbitration, including the standard for proving sovereign retaliation. It also addresses the interplay between two investment treaties (BIT and TPA) and rejects jurisdictional objections based on corruption, commercial claims, and forum selection clauses. The Tribunal's cost allocation, awarding a substantial portion of costs to the prevailing state, underscores the consequences for unsuccessful claims.
Summary
Omega Engineering LLC and Oscar Rivera, a US construction company and its owner, brought an ICSID claim against Panama under the US-Panama BIT and TPA. They alleged that after Mr. Rivera refused a $600,000 campaign contribution to then-Vice President Juan Carlos Varela, the Varela administration retaliated by terminating eight public works contracts, delaying payments, and launching a criminal investigation against Mr. Rivera. Panama argued that the contract failures were due to the Consortium's poor performance and financial weakness, not retaliation. The Tribunal, after a lengthy hearing, rejected all of Panama's jurisdictional objections (corruption precluding treaty relief, commercial claims, forum selection, and criminal investigation immunity). On the merits, the Tribunal found that the Claimants failed to prove that Panama's actions amounted to expropriation, unfair treatment, or breach of the umbrella clause. The Tribunal noted that the Consortium's projects were failing before Varela took office due to financial issues and that the criminal investigation was not shown to be retaliatory. The Tribunal dismissed all claims and ordered the Claimants to pay $4,840,086.78 of Panama's costs, reflecting that Panama prevailed but with a reduction for its unsuccessful jurisdictional objections and Mr. Varela's failure to testify.
The detail
Parties: Omega Engineering LLC and Oscar Rivera v. Republic of Panama
Case number: ICSID Case No. ARB/16/42
Outcome: The Tribunal rejected all claims and ordered Claimants to pay Respondent US $4,840,086.78 in costs.
Applicable law: US-Panama BIT (1982) and US-Panama TPA (2007), ICSID Convention
Issues in play: The case involved allegations of retaliation by President Varela for refusing a campaign contribution, versus Panama's defense that contract terminations were due to poor performance and financial weakness. The Tribunal found no treaty violations.
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.