13 votes

After the Honduran president repealed a law granting unfettered authority to outside investors, investors took the dispute to a World Bank arbitration court

3 comments

  1. skybrian
    Link
    This is a very biased description of the court case. I’ll point to this article for another view. While Scott Alexander is far from neutral and it’s a bit out of date, he’s at least trying to...

    This is a very biased description of the court case. I’ll point to this article for another view. While Scott Alexander is far from neutral and it’s a bit out of date, he’s at least trying to describe it fairly.

    6 votes
  2. [2]
    skybrian
    (edited )
    Link
    Here's a decent background article: Honduras ICSID Denunciation and Implications for Foreign Investors It's not clear to me that the denunciation applies to Prospera case. It sounds like it...

    Here's a decent background article:

    Honduras ICSID Denunciation and Implications for Foreign Investors

    In accordance with the ICSID Convention, a Contracting State may denounce ICSID Convention by written notice, and the denunciation shall take effect six months thereafter but shall not affect the rights or obligation of the Contracting State arising out of prior consent to ICSID jurisdiction. Investors that have not perfected their consent to ICSID arbitration – which in most circumstances entails filing a Request for Arbitration – before the denunciation takes effect may no longer have access to arbitration under the ICSID Convention. While in some instances, they may have access to arbitration under the ICSID's Additional Facility Rules or other arbitration rules, they would not benefit from the self-contained nature of arbitration under the ICSID Convention, which precludes ICSID awards being set aside by competent local courts, among other advantages.

    Honduras ratified the ICSID Convention in 1989 and would become only the fourth State to withdraw from the ICSID Convention. The three other States that previously withdrew were Bolivia, Ecuador and Venezuela in 2007, 2009 and 2012 respectively. As is the case with Honduras presently, ICSID denunciation occurred in the context of other State policies against private investment and attempts to avoid international liability. Those States have continued to face international arbitration proceedings before ICSID, and under other rules and before other institutions. To illustrate, since its denunciation in January 2012, Venezuela has been named as Respondent State in at least 37 proceedings, Bolivia in at least 205 and Ecuador in at least 16.

    It's not clear to me that the denunciation applies to Prospera case. It sounds like it shouldn't apply?

    Prospera claims that this denuncation was done illegally:

    Notably, Honduran legal scholars have united in criticizing the Honduran government’s denunciation of the ICSID Convention as being contrary to Honduran law and void. This is because it cannot have legal effect without the approval of the Honduran National Congress.

    I think a good rule of thumb is that when a nation goes up against a corporation, the nation probably wins, so it's not looking great for Prospera. But there are likely consequences for future foreign investment.

    4 votes