WalAm Energy LLC v. Republic of Kenya
ICSID · Investment (ICSID and treaty) · Kenya · 10 Jul 2020
Why it matters
This case clarifies the limits of investor protection under the ICSID Convention when a host state revokes a geothermal exploration licence for non-compliance with work obligations. The tribunal upheld Kenya's right to enforce its statutory framework, rejecting claims of expropriation and unfair treatment. It underscores that investors must adhere to local regulatory requirements and that mere silence by the state does not create legitimate expectations.
Summary
WalAm Energy LLC, a US/Canadian company, obtained a geothermal exploration licence from Kenya's Ministry of Energy in 2007 to develop the Suswa geothermal concession. The licence required WalAm to carry out exploration work and secure a Power Purchase Agreement (PPA) within a specified timeframe. WalAm failed to meet these obligations, leading Kenya to issue a show cause letter in April 2012 and ultimately forfeit the licence in November 2012. WalAm initiated ICSID arbitration under the ICSID Convention, arguing that the forfeiture amounted to expropriation and violated the minimum standard of treatment. The tribunal dismissed Kenya's preliminary objections to jurisdiction in 2017, allowing the case to proceed on the merits. After a hearing in 2018, the tribunal issued its award in July 2020, rejecting all of WalAm's claims. The tribunal found that the forfeiture was valid under Kenyan law, as WalAm had not complied with the work program and had not made sufficient progress toward a PPA. The tribunal also held that Kenya's actions were not expropriatory and did not breach the minimum standard of treatment, as WalAm had no legitimate expectation that the licence would not be revoked for non-compliance. The tribunal ordered WalAm to pay 75% of Kenya's legal costs and arbitration costs.
The detail
Parties: WalAm Energy LLC v. Republic of Kenya
Case number: ICSID Case No. ARB/15/7
Outcome: All of Claimant's claims dismissed; Claimant ordered to pay 75% of Respondent's legal costs and arbitration costs.
Applicable law: ICSID Convention; Geothermal Resources Licence No. 1/2007; Kenyan law
Issues in play: Kenyan geothermal licensing law vs. investor's claims of expropriation and unfair treatment under international investment law.
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