Procedural Posture

This document sets forth the Dissenting Opinion of Professor Brigitte Stern regarding the Tribunal’s Decision on Bifurcated Jurisdictional Objections in an ICSID arbitration brought by Fernando Paiz Andrade and Anabella Schloesser de León de Paiz against the Republic of Honduras under the CAFTA-DR. The core issue bifurcated for preliminary determination was whether the Tribunal possessed jurisdiction ratione materiae, specifically whether the Claimants owned or controlled their alleged investment, Pacific Solar, at the time the arbitration commenced.

Principal Legal Issues and Parties' Positions

The jurisdictional dispute centered on the legal effect of two Trust Agreements executed in 2018 to secure project finance loans from two European development banks. Under these agreements, the legal title to Pacific Solar’s shares and assets was transferred to a Honduran trustee. The Respondent argued that this transfer under Honduran law extinguished the Claimants' ownership and control, thereby depriving them of standing. Conversely, the Claimants asserted that international law recognizes and protects their continuing beneficial ownership in the enterprise.

The Majority's Findings and the Dissenting Analysis

The majority of the Tribunal concluded that while the Claimants lacked standing to bring claims on their own behalf—deeming their right to recoup the shares and assets as "too hypothetical"—they nevertheless retained sufficient indirect ownership as third-ranking beneficiaries to bring claims on behalf of the local enterprise under CAFTA-DR Article 10.16.1(b).

Professor Stern dissented vigorously from this bifurcated conclusion, characterizing it as legally contradictory. Relying on established international jurisprudence (including Barcelona Traction, Encana, and Apotex), she emphasized that while international law protects existing beneficial ownership, it does not protect rights that are merely contingent, speculative, or uncertain. Professor Stern conducted a detailed analysis of the Trust Agreements under Honduran law, demonstrating that the Claimants held only a conditional, future interest that would materialize solely if the underlying loans were fully repaid and no event of default occurred. Because the primary lenders held the existing, first-ranking beneficial rights, the Claimants possessed neither de jure nor de facto control over Pacific Solar.

Conclusion

Concluding that the Claimants held no present, vested ownership or control over the local enterprise, Professor Stern determined that the Tribunal lacked jurisdiction ratione materiae in its entirety. In her view, the Respondent’s preliminary objection should have been upheld in full, barring both the direct claims and the claims brought on behalf of the enterprise.