Case Summary No. 3

To better explain the principles underlying ISDS, we are introducing a series of case summaries here at the blog.

Our third case is Marion Unglaube v. Republic of Costa Rica and the award was rendered in May 2012. This summary is prepared based on the facts as described in the award.

The investor had several plots of land in the Pacific Coast of Costa Rica. In 1991, Costa Rica announced that it intended to create a national park around the area where the investor’s property was located, for protection of leatherback turtles. To this end, the government informed its intent to expropriate certain private properties.

The investor did not dispute the government’s objectives to protect the environment.

However, when the government finally moved to expropriate the investor’s land in 2003, the investor did not receive any compensation for this action.

From the outset, the Tribunal in the ensuing arbitration asserted that it was not empowered to question the authority of the Costa Rican government to expropriate land – an authority which has long been established and recognized by international law.

The tribunal noted however that while there can be no question concerning the right of the government of Costa Rica to expropriate property for a bona fide public purpose, expropriation must be compensated.

The tribunal went on to say that if compensation had been properly provided for and paid by the government, Costa Rica’s legal position would have been incontestable and this dispute might never have occurred.  Finally, the tribunal ordered Costa Rica to pay compensation to the investor for the expropriation.