Supervision y Control S.A. v. Republic of Costa Rica
ICSID · Investment (ICSID and treaty) · Costa Rica · 18 Jan 2017
Why it matters
This case clarifies the strict application of procedural requirements in investment treaty arbitration. The Tribunal held that claims already submitted to domestic courts are inadmissible under the BIT's fork-in-the-road provision, even if the investor later seeks to withdraw them. It also emphasized that new claims not included in the six-month notice of intent are inadmissible. The decision underscores the importance of complying with pre-arbitration procedural steps and the consequences of forum shopping.
Summary
Supervisión y Control, S.A. (SyC), a Spanish company, invested in Costa Rica through a consortium that won a tender to operate vehicle technical inspection stations. The contract provided for tariff adjustments, but disputes arose over the methodology and approval of rate increases. SyC initiated local arbitration in Costa Rica regarding tariff adjustments, and later filed an ICSID claim under the Spain-Costa Rica BIT, alleging violations of fair and equitable treatment, full protection and security, national treatment, and expropriation. Costa Rica objected to jurisdiction and admissibility, arguing that SyC had already submitted the dispute to local courts, triggering the BIT's forum selection clause (Article XI.3), and that certain claims were not properly notified six months before arbitration as required by Article XI.1. The Tribunal found it had jurisdiction over the dispute, including claims based on Article III.2 of the BIT. However, it held that all claims related to tariff adjustments and contractual breaches were inadmissible because SyC had submitted them to local courts, and the BIT required that if an investor chooses local courts, it must permanently desist before resorting to arbitration. SyC had not done so. Additionally, new claims raised in the Memorial (denial of justice, expropriation via legislative reforms, unilateral termination, and national treatment) were inadmissible because they were not included in the notice of intent. The Tribunal dismissed all claims without reaching the merits. The decision was by majority, with one arbitrator dissenting without reasons. The Tribunal ordered each party to bear its own costs, finding SyC's arguments not frivolous.
The detail
Parties: Supervision y Control S.A. v. Republic of Costa Rica
Case number: ICSID Case No. ARB/12/4
Outcome: The Tribunal dismissed all claims on grounds of inadmissibility; each party to bear its own costs.
Applicable law: Bilateral Investment Treaty between Spain and Costa Rica (BIT); ICSID Convention; ICSID Arbitration Rules
Issues in play: The case involved the interplay between the BIT's forum selection clause (Article XI.3) and the requirement to notify disputes (Article XI.1). The Tribunal had to decide whether claims previously submitted to local courts could be brought to ICSID, and whether new claims not notified in the notice of intent were admissible.
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