Sudapet Company Limited v. Republic of South Sudan
ICSID · Investment (ICSID and treaty) · South Sudan · 30 Sep 2016
Why it matters
This award is a landmark decision on state succession in investment arbitration, addressing the fate of state-owned enterprises' assets when a new state secedes. The Tribunal held that Sudapet's interests were state property of Sudan that passed to South Sudan under the territorial principle, thus not protected investments under the IPA. It clarifies the interplay between investment treaties and the law of state succession, setting a precedent for similar disputes arising from territorial changes.
Summary
Sudapet Company Limited, a Sudanese state-owned oil company, held interests in exploration and production sharing agreements (EPSAs) in what became South Sudan after secession in 2011. Sudapet claimed that South Sudan expropriated its investments without compensation, violating the Southern Sudan Investment Promotion Act 2009 (IPA). South Sudan argued that Sudapet's interests were state property of Sudan that automatically vested in South Sudan upon secession under international law, and thus were not foreign investments protected by the IPA. The Tribunal, applying the ICSID Convention and the Vienna Convention on Succession of States in Respect of State Property, Archives and Debts 1983, analyzed the Parties' Agreement of 11 April 2011, which governed the division of assets. It found that the Government of Sudan held a majority share in Sudapet and that Sudapet's EPSA interests were held on behalf of the state. Applying the territorial principle, the Tribunal concluded that these interests were 'associated with' the territory of South Sudan and therefore passed to South Sudan upon secession. Consequently, Sudapet's claims failed because its interests were not 'investments' of a foreign national under the IPA. The Tribunal dismissed all claims and counterclaims, ordering each party to bear its own costs and share ICSID costs equally.
The detail
Parties: Sudapet Company Limited v. Republic of South Sudan
Case number: ICSID Case No. ARB/12/26
Outcome: The Tribunal dismissed all claims and counterclaims, ordering each party to bear its own costs and share ICSID costs equally.
Applicable law: Southern Sudan Investment Promotion Act 2009 (IPA); ICSID Convention; Vienna Convention on Succession of States in Respect of State Property, Archives and Debts 1983; Comprehensive Peace Agreement; Parties' Agreement of 11 April 2011
Issues in play: State succession law and investment treaty protection collided: whether Sudapet's interests in oil exploration and production sharing agreements (EPSAs) in South Sudan vested in South Sudan upon secession as state property, or remained protected investments under the IPA.
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