Société Industrielle des Boissons de Guinée v. Republic of Guinea
ICSID · Investment (ICSID and treaty) · Guinea · 21 May 2014
Why it matters
This case illustrates the strict requirements for a locally incorporated company to qualify as a foreign investor under the ICSID Convention based on foreign control. The Tribunal emphasized that the burden of proof lies on the claimant to demonstrate actual foreign control, not merely contractual provisions. It also highlighted the relevance of shareholding structures and the possibility of nominee arrangements in determining control.
Summary
Société Industrielle des Boissons de Guinée (SIBG), a Guinean company, initiated ICSID arbitration against the Republic of Guinea under the 1987 Guinea Investment Code, alleging expropriation and treaty violations. SIBG was originally formed in 1988 under an Establishment Agreement and a Transfer Agreement with Guinea, which included arbitration clauses referring to the Investment Code. SIBG claimed that Guinea annulled the ratification order, sealed the factory, and forced a share transfer. Guinea objected to jurisdiction, arguing that SIBG was a Guinean company and did not meet the foreign control requirement under Article 25(2)(b) of the ICSID Convention. The Tribunal analyzed whether SIBG was under foreign control at the time of the parties' agreement. The evidence showed that while the Establishment Agreement allocated 60% of shares to foreign partners, the actual shareholding at incorporation indicated that SIASS (a French company) held 2038 shares with a notation 'portage' (nominee holding). The Tribunal found that this notation suggested the shares were held for Guinean beneficial owners, and SIBG failed to prove that foreign interests actually controlled the company. The Tribunal also noted that the President of SIBG, Mr. Kourouma, referred to the common practice of using nominees for Guinean officials. Consequently, the Tribunal declined jurisdiction, finding that SIBG did not establish foreign control. The question of prescription was not addressed. The Tribunal ordered each party to bear its own legal costs and split the arbitration costs equally.
The detail
Parties: Société Industrielle des Boissons de Guinée v. Republic of Guinea
Case number: ICSID Case No. ARB/12/8
Outcome: The Tribunal declined jurisdiction, finding that SIBG did not prove it was under foreign control as required by Article 25(2)(b) of the ICSID Convention. The question of prescription was not examined. Each party bore its own costs, and the arbitration costs were split equally.
Applicable law: ICSID Convention; Guinea Investment Code of 1987 (CIG); Establishment Agreement and Transfer Agreement of 1988
Issues in play: The key issue was whether SIBG, a Guinean company, could be treated as a foreign national under Article 25(2)(b) of the ICSID Convention due to foreign control. The Tribunal examined the actual control and shareholding structure, finding insufficient evidence of foreign control.
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