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The International Centre for Settlement of Investment Disputes (ICSID) is an international organization. It hears and resolves investment disputes between foreign investors and states. It does so in a manner that is 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 True Blue Development v. Grenada 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 (the “Project Agreement”). The agreement covered developing certain properties on the island. 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 the relationship without cause or compensation. In response, True Blue initiated arbitration proceedings against Grenada before the ICSID in 2008. The claim sought damages for breach of contract under Article II(2) and Article II(1). These provisions revolve around the Fair and Equitable Treatment doctrine of the United States-Grenada Bilateral Investment Treaty (BIT).
The Issues at Hand During Arbitration
At issue during arbitration was whether the Project Agreement constituted an investment protected by BIT provisions. Also at issue was whether either side had committed violations regarding said investment. The tribunal found that it did constitute an investment protected by BIT provisions. The agreement had resulted in “a commitment to long-term economic activity” as well as “an expectation of gain or profit from such activities”. These are two hallmarks for international investments according to ICSID jurisprudence. Furthermore, they found violations by both parties towards each other. Ultimately, however, the tribunal determined that Grenada was more liable than True Blue Development. The wrongful termination of the relationship without cause or compensation drove that finding.
Conclusion
The ICSID’s decision in True Blue Development v. Grenada is an important reminder for businesses operating internationally. Contracts must be properly drafted and reviewed prior to execution to avoid legal disputes down the road. This is especially true when dealing with state actors, who may act unilaterally against one’s interests if proper protections are not in place. No one can predict every scenario when entering into business agreements abroad. Nevertheless, experienced counsel can help minimize potential losses in arbitration if something goes awry overseas. Ultimately, this decision reinforces why international businesses should always obtain proper legal advice before entering into any type of agreement abroad.
If a state partner has terminated or breached your investment agreement, treaty protections like those in this case may apply. Contact our team to discuss whether investor-state arbitration fits your situation.
