1988

ICSID

Klockner Industrie-Anlagen BmbH v Cameroon 2 ICSID 165

1971 Klockner, a multinational European company, and Cameroon signed a Protocol Agreement, containing ISCID arbitration clause, under which Klockner undertook to erect a fertilizer factory. Klockner owned 51% shares of a join venture Cameroonian company Societe Camerounaise des Engrais SOCAME, and the remaining 49 of the shares were owned by Cameroon. A Supply Contract containing more detailed information for the project was signed between Klockner and Cameroon. It included an ICSID arbitration clause. 1973 the Establishment Agreement was signed between SOCAME and Cameroon, it too, contained an ICSID arbitration clause. 1977 SOCAME and Klockner signed a Management Agreement intended to ensure Klockner responsibility of the company’s technical and commercial management. The agreement contained ICC arbitration in Switzerland 1978 Klocner refused to subscribe to a capital increase and lost majority control of SOCAME 1980 The factory was closed after unprofitable operation. Klockner demanded the outstanding balance of the project, Cameroon asked as counterclaim compensation for losses incurred in the abandoned SOCAME project The first tribunal rejected both. 1985 The case went to annulment proceedings

Merits 1983: Claimant (Klockner) has seised the Tribunal on the basis of the supply contract between Cameroon and Klockner, Cameroon accepted it and broadened jurisdiction invoking Established Agreement between Cameroon and SOCAME. The Establishment Agreement although formally signed by the government and SOCAME was in fact negotiated between the Government and Klockner as it is known by the minutes of the session. It is undeniable that it was manifestly concluded in the interest of Klockner, at a time when Lockner was SOCAME’s majority shareholder. The establishment agreement reflected the contractual relationship between a foreign investor, acting through a local company, and the host country of this foreign investment. It would be inequitable to accept that Klockner having benefited from 1973 to 1978 from the existence of the ICSID arbitral clause, underlying legal, economic, financial and fiscal advantages and guarantees granted in the Establishment Agreement, be allowed today to contest ICSID jurisdiction with respect to questions relating to the application of the same agreement, at least during the 1973-1978 period, when the arbitration clause is invoked by the government which consented to it SOCAME was an appropriate party to the proceedings, the inclusion of ICSID arbitration clause in the 1973 Establisment Agreement presupposed and implied an agreement to consider SOCAME to be a company under foreign control which had capacity to act in ICSID proceedings. Annulment: Art 52 requires not any reasons, purely formal or apparent, but rather reasons having some substance, allowing the reader to follow the arbitral tribunal’s reasoning, on facts and on law Relevant reason on the other hand would amount to an appeal and would lead the Committee to substitute its own appreciation of the relevance of the reasons for that of the Tribunal. A reasonable path is reasons that are ‘sufficiently relevant’ reasonable capable of justifying the result reached by the tribunal… reasonable sustainable and capable of providing a basis for the decision