Piero Foresti, Laura de Carli & Others v. The Republic of South Africa
ICSID · Investment (ICSID and treaty) · South Africa · 4 Aug 2010
Why it matters
This case is a landmark for its treatment of non-disputing party participation and the costs consequences of discontinuance. It also highlights the tension between a State's sovereign right to regulate for public welfare (here, addressing apartheid-era inequities in mineral rights) and investment treaty protections. The Tribunal's decision to award costs against the claimants, who discontinued after obtaining partial relief, set a precedent for cost allocation in abandoned investment claims.
Summary
Italian and Luxembourg investors (the Foresti and Conti families, and Finstone s.à.r.l.) brought an ICSID Additional Facility arbitration against South Africa under the Italy-South Africa and Luxembourg-South Africa BITs. They claimed that South Africa's Mineral and Petroleum Resources Development Act (MPRDA), which converted old order mining rights into new order rights subject to black economic empowerment (BEE) conditions, amounted to expropriation without compensation and violated fair and equitable treatment and national treatment. The arbitration was registered in 2006. After extensive procedural steps, including a stay for settlement negotiations, the Claimants sought discontinuance in November 2009 after South Africa granted them new order mineral rights. The Respondent opposed discontinuance unless the Claimants paid its costs. The Tribunal allowed discontinuance under ICSID Additional Facility Rule 50, but ordered the Claimants to pay EUR 400,000 of the Respondent's costs, reasoning that the Claimants had abandoned some claims and could have avoided further costs by discontinuing earlier. The Tribunal also addressed petitions from non-disputing parties (NGOs) and a bribery allegation against a South African counsel, which was not pursued. The award is notable for its detailed analysis of costs in discontinued investment arbitrations and its handling of public interest participation.
The detail
Parties: Piero Foresti, Laura de Carli & Others v. The Republic of South Africa
Case number: ICSID Case No. ARB(AF)/07/01
Outcome: The Tribunal granted discontinuance of the proceedings with prejudice and ordered the Claimants to pay EUR 400,000 to the Respondent for costs.
Quantum: EUR 400,000
Applicable law: Italy-South Africa BIT (1997), Luxembourg-South Africa BIT (1998), ICSID Additional Facility Rules
Issues in play: The case involved the interplay between South Africa's post-apartheid mineral rights reform (MPRDA) and the BIT protections against expropriation and fair and equitable treatment. The Claimants alleged that the conversion of old order mining rights to new order rights under the MPRDA amounted to expropriation without compensation.
Read the full decision at italaw ↗
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