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Société Ouest Africaine des Bétons Industriels v. Senegal (ICSID)

Why it matters

This early ICSID case addressed the nationality requirement under Article 25 of the ICSID Convention, holding that a locally incorporated company controlled by foreign nationals could qualify as a foreign investor. It also set a precedent for calculating damages in investment disputes, including lost profits and overheads, and clarified the state's responsibility for contractual breaches in development projects.

Summary

SOABI, a Senegalese company controlled by Panamanian and Belgian nationals, entered into a 1975 agreement with Senegal to build 15,000 low-cost housing units. The project required SOABI to construct a prefabrication plant and secure financing, with Senegal guaranteeing loans. After Senegal failed to provide necessary land and financing, SOABI initiated ICSID arbitration in 1982. Senegal challenged jurisdiction, arguing SOABI was not a foreign investor under Article 25 of the ICSID Convention because it was incorporated in Senegal. The tribunal rejected this, finding that SOABI was controlled by foreign nationals and thus qualified. On the merits, the tribunal held Senegal liable for breaching its obligations to provide land and financing, which caused the project's failure. The tribunal awarded SOABI 150 million FCFA for lost profits and 552,989,664 FCFA for overheads and fixed assets, plus interest. The award was rendered on 9 February 1988.

The detail

Parties: Société Ouest Africaine des Bétons Industriels v. Senegal

Case number: ICSID Case No. ARB/82/1

Outcome: Senegal ordered to pay SOABI 150,000,000 FCFA for lost profits and 552,989,664 FCFA for overheads and fixed assets, plus interest.

Quantum: 702,989,664 FCFA plus interest

Applicable law: ICSID Convention; Convention d'établissement of 3 November 1975; Senegalese law

Issues in play: The tribunal applied the ICSID Convention and the investment agreement to determine Senegal's liability for breach of contract, focusing on the state's obligation to finance the project and the calculation of damages.

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