On March 13, 2020, the International Centre for Settlement of Investment Disputes (ICSID) rejected all three of the respondent's preliminary objections in Daniel W. Kappes and Kappes, Cassiday & Associates v. Republic of Guatemala. They released the full text of their decision [3] on April 10, 2020. The claimants in the case allege that Guatemala has negatively impacted their Guatemalan company, Exmingua and that Guatemala has breached several provisions of the Dominican Republic-Central America Free Trade Agreement. The Republic of Guatemala raised three preliminary objections: First, that claimants are inappropriately interpreting the Agreement as permitting compensation for “losses sustained directly by Exmingua”; second, the claimants did not comply with the notice requirements necessary to bring a Most-Favored-Nation Treatment claim; and third, that the Court does not have jurisdiction because the event relevant to the claimants’ claim for damages happened outside of the time frame noted in the Agreement. 

 

In its rejection of the first claim, the Court stated that the wording of the agreement had to be taken at face value and that “the particular terms adopted are not consistent with barring a claimant from pursuing ‘on its own behalf’ a claim for losses it ‘incurred,’ just because those losses may have been incurred indirectly rather than directly.“ Regarding the second objection, in their Notice of Arbitration, the claimants brought a Most-Favored-Nation Treatment claim based on a court case that had not been decided at the time they submitted their Notice of Intent. Article 10.16.2 states that claimants have to include all the claims they are submitting in their original notice, but Article 10.16.2 does not address what happens if new information comes to light after the original notice is sent. For more context, the Court turned to Article 10.16.4 which “expressly allows for the possibility that an additional claim may be ‘asserted for the first time after such notice of arbitration,’ without requiring a repetition of the notice of intent and notice of arbitration process.“ Lastly, regarding the third objection, the Court concluded “that they [the claimants] are not pursuing any full protection and security claim for events prior to the agreed ‘critical date’ of 9 November 2015 … clear[ing] the initial hurdle for the Preliminary Objections stage, which is focused on the Claimants’ allegations [as opposed to a “factual investigation” that may bring to light information that does undermine the Court’s jurisdiction.].” Professor Zachary Douglas QC issued a partial dissenting opinion [4], taking issue with the Court’s judgment regarding the first objection.