{"id":467,"date":"2010-04-07T14:09:00","date_gmt":"2010-04-07T19:09:00","guid":{"rendered":"http:\/\/itn.mattrock.ca\/2010\/04\/07\/tribunal-hears-additional-challenges-to-its-jurisdiction-in-railroad-development-corporation-v-republic-of-guatemala-3\/"},"modified":"2013-01-23T08:12:42","modified_gmt":"2013-01-23T14:12:42","slug":"tribunal-hears-additional-challenges-to-its-jurisdiction-in-railroad-development-corporation-v-republic-of-guatemala-3","status":"publish","type":"post","link":"https:\/\/www.iisd.org\/itn\/2010\/04\/07\/tribunal-hears-additional-challenges-to-its-jurisdiction-in-railroad-development-corporation-v-republic-of-guatemala-3\/","title":{"rendered":"Tribunal hears additional challenges to its jurisdiction in Railroad Development Corporation v. Republic of Guatemala"},"content":{"rendered":"

By Elizabeth Whitsitt<\/strong><\/span><\/p>\n

April 8, 2010<\/strong><\/span><\/p>\n

The hearing on preliminary objections to jurisdiction in the Railroad Development Corporation (RDC) v. Republic of Guatemala arbitration took place from Monday, March 1, 2010 through Wednesday, March 3, 2010.<\/span><\/p>\n

Consistent with the transparency provisions of CAFTA-DR, the hearing conducted in early March was open to the public, except with respect to issues involving confidential matters.\u00a0 The hearing was broadcast live in a conference room of the World Bank.<\/span><\/p>\n

In 1997 RDC, through its Guatemalan subsidiary Compania Desarrolladora Ferroviaria, S.A. (FVG), won a public bid and signed a contract with the Guatemalan state-owned railway system, Ferrocarriles de Guatemala (FEGUA).\u00a0 Under the terms of that contract, RDC agreed to resurrect a transit system which required significant refurbishment.<\/span><\/p>\n

While RDC was somewhat successful in its restoration of Guatemala\u2019s railway system, it began commercial arbitral proceedings in Guatemala in June of 2005.\u00a0 Specifically, RDC asserted that Guatemala had failed to clear squatters from railway properties thus violating provisions of the contract between FVG and FEGUA.\u00a0 A little more than a year later, the Guatemalan government adopted the so-called Lesivo resolution, which declared the contract with FVG injurious to the state.<\/span><\/p>\n

In July 2007, RDC filed a claim with ICSID<\/span> claiming breaches of CAFTA-DR and some US $65 million in damages.\u00a0 Specifically, RDC contends that after the adoption of the Lesivo resolution, FEGUA broke its agreement with FVG when it missed trust-fund payments and failed to remove squatters from the railway tracks.<\/span><\/p>\n

With local and international arbitration proceedings between the parties pending, Guatemala unsuccessfully attempted to challenge the CAFTA-DR tribunal\u2019s jurisdiction in the spring of 2008.\u00a0 At the heart of Guatemala\u2019s jurisdictional challenge was the fact that the local arbitration proceedings had not been discontinued.\u00a0 Guatemala argued that it had only consented to arbitrate CAFTA-DR disputes that were not being decided in other forums.<\/span><\/p>\n

In rejecting Guatemala\u2019s challenge, the CAFTA-DR tribunal ultimately determined that there was no overlap between the measures underlying the domestic and international arbitration claims.\u00a0 As a result, the tribunal ordered that the proceedings move to a consideration of the merits of RDC\u2019s claims.<\/span><\/p>\n

In the summer of 2009, approximately one month after RDC filed its written pleadings on the merits of the dispute, Guatemala raised additional jurisdictional objections and asked that its concerns be addressed by the tribunal before continuing with the merits phase of the proceedings.<\/span><\/p>\n

In a procedural order dated August 24, 2009, the tribunal consented to Guatemala\u2019s request.\u00a0 Proceedings on the merits were suspended pending a decision on Guatemala\u2019s additional jurisdictional objections.<\/span><\/p>\n

This case is one of four known arbitral proceedings initiated under the Central American \u2013 Dominican Republic \u2013 United States Free Trade Agreement (CAFTA-DR) in the summer of 2007.*<\/span><\/p>\n

* Aside from Railroad Development Corporation v. Guatemala, other CAFTA-DR arbitrations include: Pacific Rim Cayman v. El Salvador, Commerce Group Corporation and San Sebastian Gold Mines, Inc. v. El Salvador, and TWC Group .v. Dominican Republic<\/span><\/p>\n

Previous Related ITN<\/span> Reporting:<\/span><\/p>\n

\u201cTribunal refuses to clarify decision on jurisdiction in Railroad Development Corporation v. Republic of Guatemala,\u201d By Damon Vis-Dunbar, Investment Treaty News, 20 January 2009, available here:<\/span><\/p>\n

http:\/\/www.investmenttreatynews.org\/cms\/news\/archive\/2009\/01\/20\/tribunal-refuses-to-clarify-decision-on-jurisdiction-in-railroad-development-corporation-v-republic-of-guatemala.aspx<\/span><\/a><\/p>\n

\u201cGuatemala\u2019s objection to jurisdiction dismissed in DR-CAFTA arbitration,\u201d By Damon Vis-Dunbar, Investment Treaty News, 26 November, 2008, available here:<\/span><\/p>\n

http:\/\/www.investmenttreatynews.org\/cms\/news\/archive\/2008\/11\/26\/guatemala-s-objection-to-jurisdiction-dismissed-in-cafta-arbitration.aspx<\/span><\/a><\/p>\n

\u201cUS railway investor\u2019s claim against Guatemala tests CAFTA transparency provisions,\u201d By Fernando Cabrera Diaz and Luke Eric Peterson, Investment Treaty News, 7 September, 2007, available here:<\/span><\/p>\n

http:\/\/www.IISD<\/span>.org\/pdf\/2007\/itn_sep7_2007.pdf<\/span><\/a><\/p>\n

 <\/p>\n