1988

ICSID

Societe Oest Africaine des Betons Industriels SOABI v Senegal 2 ICSID 165

1975 Senegal and Naikida, Panamanian company, entered into an agreement for the construction of low-income housing. Naikida undertook to build a plant for the prefabrication or concrete elements to be used in the construction. Juan Baudoux, a Belgian national, acting on behalf of Flexa, Panamanian company with head office in Geneva, filled papers in Dakar incorporating SOABI. The main object of SOABI was to construct and operate the prefabrication plant in order to permit the construction of low-income housing units in order to fulfil the terms of Naikida agreement. All the shares of SOABI were owned by Flexa, which was itself controlled by Belgians. SOABI and Senegal entered into an agreement for the construction of the law-income housing units, and incorporated in the agreement the Naikida agreement. 1975 Senegal and SOABI entered into the an agreement for the establishment of a prefabricated concrete plant, the ‘Establishment Agreement’, that included a proviso to ICSID arbitration. There were differences with the project of the houses, and the dispute was referred to ICSID Senegal objected ICSID jurisdiction on the basis that the dispute has arisen in respect of the construction of the housing units and not in respect of the erection of the factory, the only matter with which the Establishment Agreement was concerned. Besides, SOABI, being controlled by Panamanian company did not meet the nationality requirements of 25 ICSID

1984 Jurisdiction: The arbitration clause in the Establishment agreement conferred upon SOABI, a national of Senegal, the right to bring ICSID arbitral proceedings. The clause showed that the parties had not intended to deny SOABI’s Senegalese nationality, but, rather, that notwithstanding its nationality, they had agreed that it would be deemed a national of another contracting state by reason of it being controlled by foreign interest. An interpretation which had the effect of limiting the protected foreign interests only to those which had immediate control over the company would be contrary to the purpose of the convention, namely, to reconcile the whish of states hosting foreign investments to see those investments carried out through companies established under local law, on the one hand, and their desire to give those companies the capacity to be parties to procedures under the auspices of ICSID, on the other. The investors might be led, for reasons of their own, to invest their funds through intermediaries, while retaining the same degree of control over the national company as they would have been able to exercise as direct shareholders. Indirect control by nationals of contracting states of the company established under local law was, therefore, sufficient to satisfy the nationality requirements of art 25. Accordingly, although the nationality of Flexa was Panamanian, nationals of Belgium, a Contracting State, exercised control over Flexa, and SOABI therefore met the nationality requirements of the Convention. Furthermore the Senegal government could not been misled by the declaration that the location of the dead office of Flexa was in Geneva and not in Panama, Flexa was known to be a corporation of convenience, its interests had at all times been represented by Belgian nationals.