RSM Production Corporation v. Central African Republic
ICSID · Investment (ICSID and treaty) · Central African Republic · 11 Jul 2011
Why it matters
This case illustrates the limits of force majeure in investment arbitration: while it can suspend contractual obligations, it does not automatically extend the contract term if the investor fails to take steps within its control (like applying for renewal). The Tribunal also clarified that damages are limited to the suspension period and must be supported by evidence.
Summary
RSM Production Corporation, a U.S. company, entered into a petroleum exploration and exploitation contract with the Central African Republic (CAR) in 1999. In 2003, due to civil war and political turmoil, RSM invoked force majeure to suspend its obligations. CAR did not accept the suspension, and RSM initiated ICSID arbitration under the contract. The Tribunal first issued a Decision on Jurisdiction and Liability on December 7, 2010, finding that force majeure had occurred and suspended the contract from April 22, 2003, but that the contract and exploration permit expired on November 23, 2004 because RSM failed to apply for renewal. The Tribunal also found that CAR breached its obligation under Article 28.2 of the contract to take steps to facilitate resumption after force majeure. In the Award on July 11, 2011, the Tribunal addressed damages. RSM claimed over $100 million for seismic data, well logs, and other expenses, but the Tribunal limited recovery to the suspension period (April 22, 2003 to November 23, 2004) and required supporting evidence. Most claims were rejected for lack of proof or because they fell outside the relevant period. The only award was $27,752 for rent paid during the fourth year of the contract, which was supported by a check. The Tribunal also rejected CAR's counterclaim for abuse of process. RSM later sought annulment, which was dismissed in 2013.
The detail
Parties: RSM Production Corporation v. Central African Republic
Case number: ICSID Case No. ARB/07/2
Outcome: The Tribunal awarded RSM $27,752 for rent paid during the suspension period, rejecting all other claims and the counterclaim.
Quantum: 27,752 USD
Applicable law: ICSID Convention, ICSID Arbitration Rules (2006), Contract for exploration and exploitation of petroleum (1999), CAR Petroleum Code
Issues in play: Force majeure under the contract versus the obligation to seek renewal of the permit; the Tribunal held that force majeure suspended performance but did not excuse the failure to apply for renewal.
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.