Togo Electricité and GDF-Suez Energie Services v. Republic of Togo
ICSID · Investment (ICSID and treaty) · Togo · 10 Aug 2010
Why it matters
This ICSID award clarifies the boundary between contractual termination and treaty expropriation. The tribunal held that a unilateral termination clause in a state contract can be validly exercised without triggering expropriation claims, limiting damages to those specified in the contract. It also rejected a parent company's claim for reflective loss and a state's counterclaim for alleged mismanagement, reinforcing the principle that contractual remedies prevail over treaty claims when the dispute arises from the contract.
Summary
Togo Electricité, a Togolese company majority-owned by French energy group GDF Suez, entered into a 20-year concession agreement with the Republic of Togo in 2000 to distribute and sell electricity. The concession was governed by Togolese law and included an ICSID arbitration clause. In February 2006, Togo Electricité unilaterally terminated the concession under Article 57, which allowed termination with 30 days' notice if the state failed to pay its electricity bills. Togo disputed the validity of the termination and issued a presidential decree purporting to terminate the concession for cause, alleging mismanagement. Togo Electricité initiated ICSID arbitration, claiming contractual indemnities and unpaid bills. The parent company GDF SES also claimed for loss of share value and reputational harm. The tribunal found that Togo Electricité validly exercised its contractual right to terminate, and that the presidential decree was ineffective. It awarded Togo Electricité approximately 39.16 billion CFA francs, comprising contractual indemnities (10.6 billion), bank balances (1.19 billion), value of property left behind (1.5 billion), unpaid consumption (25.8 billion), and other sums, plus interest at 6.589% from the termination date. The tribunal rejected all claims by GDF SES, holding that a parent company cannot recover for reflective loss where the subsidiary has already been compensated. It also dismissed Togo's counterclaim for 100 billion CFA francs, finding no evidence of fault by the claimants. The award is notable for its strict adherence to the contract's termination clause and its rejection of treaty-based expropriation claims in a purely contractual dispute.
The detail
Parties: Togo Electricité and GDF-Suez Energie Services v. Republic of Togo
Case number: ICSID Case No. ARB/06/7
Outcome: Togo Electricité validly terminated the concession agreement; Togo ordered to pay approximately 39.16 billion CFA francs in contractual indemnities, bank balances, property, and unpaid consumption, plus interest; all claims by GDF SES and Togo's counterclaim dismissed.
Quantum: 39,162,208,549 CFA francs (approx. USD 78 million at 2010 rates) plus interest
Applicable law: ICSID Convention; Togo-France BIT (implied); Concession Agreement of 5 September 2000; Togolese law; BCEAO interest rate plus 2%
Issues in play: The tribunal applied the contract's termination clause (Article 57) rather than expropriation under the BIT, limiting recovery to contractual indemnities. It rejected the state's argument that termination was illegal or abusive.
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