The International Centre for Settlement of Investment Disputes (ICSID) is an international organization that hears and resolves investment disputes between foreign investors and states in a manner that’s both independent and impartial. This case review will focus on the ICSID’s decision in True Blue Development Limited and Others v. Grenada, a dispute that arose out of a breach of contract between two parties.
Background of the Dispute
True Blue Development Limited (“True Blue”) is a company based in St. Lucia which, among other things, provides real estate development services to clients around the world. In 2003, True Blue entered into a joint venture agreement with the Government of Grenada to develop certain properties on the island (the “Project Agreement”). Under this agreement, True Blue was responsible for developing various resorts on Grenada; however, in 2006, following numerous issues with the project, the Government of Grenada terminated their relationship with True Blue without cause or compensation. In response, True Blue initiated arbitration proceedings against Grenada before the ICSID in 2008 claiming damages for breach of contract, under Article II(2) and Article II(1) which revolves around of Fair and Equitable Treatment doctrine of the United States-Grenada Bilateral Investment Treaty (BIT).
True Issues at Hand During Arbitration
At issue during arbitration were questions related to whether or not the Project Agreement constituted an investment protected by BIT provisions as well as if there had been any violations by either side regarding said investment. The tribunal found that it did constitute an investment protected by BIT provisions because it had resulted in “a commitment to long-term economic activity” as well as “an expectation of gain or profit from such activities” – two hallmarks for international investments according to ICSID jurisprudence. Furthermore, they found that there had been violations by both parties towards each other but ultimately determined that Grenada was more liable than True Blue due to its wrongful termination of their relationship without cause or compensation.
The ICSID’s decision in this case serves as an important reminder for how important it is for businesses operating internationally to ensure that all contracts are properly drafted and reviewed prior to execution so as to avoid potential legal disputes down the road – especially when dealing with state actors who may be more likely to act unilaterally against one’s interests without proper protections in place beforehand. While it’s impossible to predict every scenario imaginable when entering into business agreements abroad, having experienced counsel can help minimize potential losses during arbitration proceedings should something go awry during business operations overseas. Ultimately, this decision reinforces why international businesses should always obtain proper legal advice before entering into any type of agreement abroad.