INTERNATIONAL CENTRE FOR SETTLEMENT OF INVESTMENT DISPUTES
In the arbitration proceeding between
FERNANDO PAIZ ANDRADE AND ANABELLA SCHLOESSER DE LEÓN DE PAIZ
and
REPUBLIC OF HONDURAS
ICSID Case No. ARB/23/43
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1. Although the majority of the Tribunal is composed of highly distinguished colleagues, I am compelled to disagree with their analysis of the Tribunal’s assertion of jurisdiction. This is a complex case and although the three members of the Tribunal had lengthy and challenging exchanges of views, they could not at the end of the day arrive at unanimous analyses. I find myself obliged to explain my understanding of the facts of the case and develop what I consider to be the correct legal approach to the situation. Although I have many reservations on other parts of the Decision on Bifurcated Jurisdictional Objections (the “Decision”), I will concentrate my analysis on the jurisdictional objection ratione materiae presented by the Respondent on the basis that the Claimants do not own or control their alleged investment, a question which the Tribunal has accepted unanimously to bifurcate in Procedural Order No. 6 dated 31 July 2025.
2. In order to set the stage, it can be indicated at the outset that the Claimants, nationals of Guatemala, alleged to own directly (through 0,01% of the shares) and indirectly through the Bahamas company [Redacted] (through 99,99% of the shares) the local Honduran company Pacific Solar, considered to be their investment, before these two companies entered into two Trust Agreements, both dated 12 January 2018, with a Honduran Bank, [Redacted]. I agree with the majority that, although this might not have been clear at the beginning of the proceeding, this initial situation of ownership has been proven to the satisfaction of the Tribunal and can be taken as a point of departure of the analysis.
3. The issue that remains to be decided is whether any entitlement of the Claimants to their investment continues to exist after the signature of the two Trust Agreements. As Pacific Solar needed funds, it entered into a project finance, based on loans from DEG, a German public development bank and FMO, a Dutch public development bank, referred to as “the Lenders.” As security for obtaining the loans, [Redacted] placed its shares in Pacific Solar and Pacific Solar placed its assets – being mainly the Nacaome Plant and the PPA – in trust with [Redacted]. The Share Trust Agreement identifies the two Lenders as “first-ranking beneficiaries”, whereas the Settlor, [Redacted], is identified as the “second-ranking beneficiary”; the Assets Trust Agreement identifies DEG as the “first-ranking beneficiary” and FMO as the “second-ranking beneficiary”, whereas the Settlor, Pacific Solar, is identified as the “third-ranking beneficiary.”
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4. The core issue is to know whether, in this complex legal construction, the Claimants have protected rights under international law that give them standing to bring claims under the CAFTA-DR. According to me, the answer is negative, while the majority considered that the Claimants have no standing to bring claims on their own behalf, but that they have standing to bring claims on behalf of the Honduran company, Pacific Solar, which I find two incompatible conclusions, as will be further explained.
5. Before entering into the analysis of the proprietary status of the Claimants, it should be recalled that in the CAFTA-DR there is a possibility for an investor to bring a claim on its own behalf and/or on behalf of an enterprise of the host State, which it owns or controls directly or indirectly, as stated in Article 10.16:
Submission of a Claim to Arbitration:
1. In the event that a disputing party considers that an investment dispute cannot be settled by consultation and negotiation:
(a) the claimant, on its own behalf, may submit to arbitration under this Section a claim
(i) that the respondent has breached
(A) an obligation under Section A,
(B) an investment authorization, or
(C) an investment agreement;
and
(ii) that the claimant has incurred loss or damage by reason of, or arising out of, that breach; and
(b) the claimant, on behalf of an enterprise of the respondent that is a juridical person that the claimant owns or controls directly or indirectly, may submit to arbitration under this Section a claim
(i) that the respondent has breached
(A) an obligation under Section A,
(B) an investment authorization, or
(C) an investment agreement;
and
(ii) that the enterprise has incurred loss or damage by reason of, or arising out of, that breach.1
6. Indeed, the Claimants have used this possibility to act both on their own behalf and on behalf of Pacific Solar, as is apparent in their Notice of Arbitration:
Mr. Fernando Paiz Andrade (“Mr. Paiz”) and Ms. Anabella Schloesser de Leon de Paiz (“Ms. Schloesser de Paiz”) (together, the “Paizes,” the “Investors,” or “Claimants”), nationals of Guatemala, on their own behalf and on behalf of
1 CAFTA-DR, Central America – Dominican Republic – United States Free Trade Agreement, CL-001-EN (Resubmitted). Emphasis added. ↩
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Pacific Solar Energy, S.A. de C.V. (“Pacific Solar” or the “Enterprise”), hereby submit this Notice of Arbitration [...].2
7. It is important to keep this in mind when analysing the claims presented by the Claimants on their own behalf and the claims presented on behalf of Pacific Solar. The investment of the Claimants consists of their shares in Pacific Solar, the investment of Pacific Solar consists of its assets, i.e., the PPA and the Nacaome Plant.
8. As mentioned above, it appears that the majority concludes that the Claimants have no standing to present claims on their own behalf as these claims are based on rights which are “too hypothetical”, while they have standing to bring claims on behalf of Pacific Solar, for reasons that remain completely unexplained. More precisely, I find that, in the presentation of my colleagues relating to this objection, there is absolutely no link between point A – their analysis of the law and the facts of the case – and point B – their conclusions: on the one hand, that “[t]he Respondent’s objection to jurisdiction is upheld insofar as it relates to the Claimants’ claim for reparation brought on their own behalf pursuant to CAFTA-DR Article 10.16.1(a)”3, because “the Claimants’ effectively recouping their shares, the Plant and the PPA is too hypothetical in nature to found their standing now to request other than symbolic reparation on their own behalf.”4; on the other hand, that the Claimants can bring a claim on behalf of Pacific Solar which, according to the majority, they own indirectly but don’t control. These conclusions appear to be contradictory: if it were true, as stated by the majority, that “the Claimants’ effectively recouping their shares, the Plant and the PPA is too hypothetical in nature to found their standing”, it is difficult to understand that the claim of the Claimants on their own behalf and the claim of the Claimants on behalf of Pacific Solar have been treated differently, although both the recoupment of the shares of Pacific Solar by [Redacted] and the recoupment of the Plant and the PPA by Pacific Solar have been considered by the majority to be too hypothetical.
9. Without trying to understand why these two situations have not been analysed as “too hypothetical” in a similar way, I will present here what I consider as the correct and
2 Notice of Arbitration, 24 August 2023, ¶ 1. Emphasis in bold in the original, emphasis in bold and underlined added. ↩
3 Decision, ¶ 346. Emphasis added. ↩
4 Decision, ¶ 330. Italics in the Decision, emphasis in bold added. ↩
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rigorous reasoning that should have been followed, without too many references to the Decision, as far as possible.
10. The first thing to be ascertained is the law under which the proprietary status of the Claimants has to be defined. The Parties have contradictory approaches on this question, the Respondent referring to domestic law, the Claimants referring to international law.
11. According to the Respondent:
Since the FTA does not define the concept of “ownership,” the applicable standard for determining legal ownership of an asset is local law.5
12. According to the Claimants:
According to Respondent, because the Treaty does not define “ownership,” the Tribunal should resort to Honduran municipal law to define it. This is wrong. As Respondent’s authority observes, while the CAFTA-DR does not define “ownership,” it refers to it repeatedly, and Article 1.2 of the CAFTA-DR makes clear that the Treaty Parties must “interpret and apply the provisions of this Agreement in the light of its objectives … and in accordance with applicable rules of international law.” This provision makes no reference to the domestic law of the State Parties.6
13. Concerning the position of the majority on the issue of the applicable law, I find it difficult or even impossible to follow the path which goes back and forth from local law to international law as embodied in the CAFTA-DR, with several references to “ownership within the meaning of the CAFTA-DR” and renders the analysis ambiguous and incoherent. I will therefore avoid discussing this position and go forward with my own analysis based on overwhelming jurisprudence.
14. It is common ground that, when international law has not developed its own rules, the existence of investors’ rights depends on domestic law, as was clearly explained by the International Court of Justice in the seminal and well-known case of the Barcelona Traction:
5 Reply on Jurisdiction, ¶ 141. Emphasis added. ↩
6 Rejoinder on Jurisdiction, ¶ 288. Emphasis in the original. ↩
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In this field international law is called upon to recognize institutions of municipal law that have an important and extensive role in the international field. This does not necessarily imply drawing any analogy between its own institutions and those of municipal law, nor does it amount to making rules of international law dependent upon categories of municipal law. All it means is that international law has had to recognize the corporate entity as an institution created by States in a domain essentially within their domestic jurisdiction. This in turn requires that, whenever legal issues arise concerning the rights of States with regard to the treatment of companies and shareholders, as to which rights international law has not established its own rules, it has to refer to the relevant rules of municipal law. Consequently, in view of the relevance to the present case of the rights of the corporate entity and its shareholders under municipal law, the Court must devote attention to the nature and interrelation of those rights.7
15. This approach has been generally accepted by international investment tribunals, as well as by doctrinal work.
16. Some jurisprudential examples can be given here, like the decision in Encana v. Ecuador:
The second preliminary question concerns the applicable law. The relevant clause, Article XIII(7) of the BIT, provides only [that] a tribunal exercising jurisdiction under the BIT “shall decide the issues in dispute in accordance with this Agreement and applicable rules of international law”. Unlike many BITs there is no express reference to the law of the host State. However for there to have been an expropriation of an investment or return (in a situation involving legal rights or claims as distinct from the seizure of physical assets) the rights affected must exist under the law which creates them, in this case, the law of Ecuador.8
17. Another example is the decision in Perenco v. Ecuador:
Given the absence of detailed general or conventional rules of international law governing the organisation, operation, management and control of an enterprise, a tribunal should in principle be guided by the more detailed prescriptions of the applicable municipal law.9
18. In the same vein, Professor Douglas points out that:
General international law contains no substantive rules of property law. Nor do investment treaties purport to lay down rules for acquiring rights in rem over
7 Barcelona Traction, Light and Power Company, Limited (Belgium v. Spain) (New Application: 1962), Judgment of 5 February 1970, ¶ 38. Emphasis added. ↩
8 EnCana Corporation v. Republic of Ecuador, LCIA Case No. UN3481, UNCITRAL, Award, 3 February 2006, RL-139, ¶ 184. Emphasis added. ↩
9 Perenco Ecuador Ltd. v. Republic of Ecuador, ICSID Case No. ARB/08/6, Decision on Remaining Issues of Jurisdiction and on Liability, 12 September 2014, CL-067-EN, ¶ 522. See also Mason Capital L.P. & Mason Management LLC v. Republic of Korea, PCA Case No. 2018-55, Final Award, 11 April 2024, RL-194, ¶ 969: “As the Tribunal explained in its Decision on Respondent’s Preliminary Objections, the ownership of assets can only be determined by reference to the applicable domestic law.” ↩
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tangibles and intangibles. Whenever there is a dispute about the scope of the property rights comprising the investment, or to whom such rights belong, there must be a reference to a municipal law of property.10
19. While reiterating that the existence of rights has to be ascertained in domestic law, the decision in the case of Nagel, in which the following was stated, indicates that the standards of protection of those rights have to be found in public international law:
The principal source of governing law in this case is the 1990 Investment Treaty. The protection given to Mr Nagel must be measured by the Treaty’s provisions, interpreted in light of the purposes the Treaty was intended to achieve. The Treaty’s terms show that it guarantees a high level of investment protection.
…
The Arbitral Tribunal has already noted that the basis of Mr Nagel’s claims in this case is the Investment Treaty and that that Treaty should be interpreted in accordance with the rules of public international law. However, Czech domestic law will be of some relevance, since the terms “investment” and “asset” in Article 1 of the Investment Treaty cannot be understood independently of the rights that may exist under Czech law. It is therefore necessary to determine what is the legal significance of that Cooperation Agreement under Czech law.11
20. A similar analysis can be found in Emmis v. Hungary:
In order to determine whether an investor/claimant holds property or assets capable of constituting an investment it is necessary in the first place to refer to host State law. Public international law does not create property rights. Rather, it accords certain protections to property rights created according to municipal law.12
21. In conclusion, in the general case where international law has not developed a position relating to the substance of the rights that are protected by international law, they are created and defined by national law. But, if generally defined by domestic law, the investors’ rights are always protected by international law.
10 Z. Douglas, The International Law of Investment Claims, 2009, RL-149, ¶¶ 101-102. Emphasis added. ↩
11 William Nagel v. The Czech Republic, SCC Case No. 049/2002, Final Award, 3 September 2003, ¶¶ 77 and 316. Emphasis added. ↩
12 Emmis International Holding, B.V., Emmis Radio Operating, B.V., and MEM Magyar Electronic Media Kereskedelmi és Szolgáltató Kft. v. Hungary, ICSID Case No. ARB/12/2, Award, 16 April 2014, CL-315-EN, ¶ 162. ↩
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22. It is necessary to turn to Honduran law and the contractual arrangements under Honduran law entered into by [Redacted] and Pacific Solar, in order to determine what is the substance of the rights that can be invoked by the Claimants, either on their own behalf or on behalf of Pacific Solar. It can be noted here that the Claimants are not signatories of the two Trust Agreements. The only rights they invoke refer to their alleged position as shareholders of Pacific Solar through [Redacted] and as alleged owners and controllers of Pacific Solar.
23. It is not contested that under Honduran law a trust implies a transfer of ownership to the Trustee, as indicated in Article 1035 of the Honduran Code of Commerce:13
A trust involves the transfer of rights or ownership of property to the trustee.
24. This agreement defines the respective rights of the Settlor, i.e., [Redacted], and the Trustee, i.e., [Redacted], as well as the rights of the Lenders – the Dutch FMO and the German DEG – to the benefit of which the Trust was instituted:
25. [Redacted] has the legal title and the ownership of the shares of Pacific Solar, which belonged to the Claimants before the signature of the Share Trust Agreement:
BACKGROUND INFORMATION …
further stated … that … the entity he represents intends to transfer in trust the entirety of the Trust Shares to [Redacted] so that the bank, in its capacity as TRUSTEE, may assume legal title thereto, subject to the purposes of this Trust Agreement as described hereinafter.[…] ESTABLISHMENT OF THE TRUST:
[Redacted] further stated that, on behalf of the Settlor, he hereby transfers to the Trustee, and the Trustee accepts, legal title to and ownership of the Trust
13 Code of Commerce of the Republic of Honduras, R-014-EN (Resubmitted). This has been admitted by the Decision in ¶ 311. ↩
14 Share Trust Agreement between [Redacted], DEG and FMO (“Share Trust Agreement”), C-266-EN. I am referring in my Dissenting Opinion to the version submitted by the Claimant, but I am aware of the fact that the Respondent has submitted its own translation of the Claimant exhibit C-266-EN (Respondent’s resubmission), after the Hearing, on 20 November 2025. I have compared the two texts and, in my view, there are only distinctions without a difference. ↩
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Shares represented by the Share Certificates issued by the Borrower [Pacific Solar].15
26. The two Lenders ARE first-ranking beneficiaries.
27. It is stated in the Share Trust Agreement that the Lenders, FMO and DEG, shall “be collectively referred to as the “FIRST-RANKING BENEFICIARIES”. The Trust has been precisely instituted in order to guarantee the repayment of the loans granted to Pacific Solar by the Lenders:
BACKGROUND INFORMATION …
further stated … that, … for the purpose of ensuring the fulfillment of the Secured Obligations of the Borrower to the First-Ranking Beneficiaries under the Loan Agreements, including, without limitation, the payment of interest, fees, commissions, expenses, charges, and any other payment obligations arising from and/or associated with the Common Terms Agreement, promissory notes issued by the Borrower in connection with or arising from the Loan Agreements, all of which are owed to the First-Ranking Beneficiaries as creditors under the Loan Agreements – and for the definitive commissioning of the Project - the entity he represents intends to transfer in trust the entirety of the Trust Shares to [Redacted] so that the bank, in its capacity as TRUSTEE, may assume legal title thereto, subject to the purposes of this Trust Agreement as described hereinafter.16
28. The Settlor, [Redacted], MIGHT BE the second-ranking beneficiary in the future, only if and when the loans have been fully reimbursed:
DESIGNATION OF THE SECOND-RANKING BENEFICIARY: For the purposes of this agreement and the benefits derived herefrom, the Settlor shall serve as SECOND-RANKING BENEFICIARY, solely and exclusively in connection with the return of the Trust Shares, insofar as the Secured Obligations have been paid in full.17
29. Moreover, if the loan is not repaid and there is an Event of Default, the rights of the second-ranking beneficiary will never materialize:
[…] the Trustee, upon receiving written notification from the Agent Bank informing that an event of default has occurred under the Financing Documents, shall either: (i) execute the transfer in payment of the Trust Shares in favor of the First Beneficiaries, to serve as an instrument of partial or total payment of the Secured Obligations, or (ii) alternatively proceed to sell the shares in a public
15 Share Trust Agreement, C-266-EN, p. 4. Emphasis in bold in the original, emphasis in bold and underlined added. ↩
16 Share Trust Agreement, C-266-EN, p. 4. Emphasis in bold in the original, emphasis in bold and underlined added. ↩
17 Share Trust Agreement, C-266-EN, p. 5. Emphasis in bold in the original, emphasis in bold and underlined added. ↩
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auction, using the proceeds from such auction to pay, partially or totally, the Secured Obligations as provided in clause seven of this Instrument.18
30. This means that the second-ranking beneficial ownership has no substance at the present time, when the Tribunal has to decide the case, as it will only possibly materialize in the future when the first-ranking beneficiary have been fully satisfied, i.e., when the loans have been entirely repaid, or never materialize if there is an Event of Default. The Claimants through [Redacted] have no right to any benefit as long as the Trust is in place and might only obtain the return of their shares if and when the loan has been fully reimbursed and no Event of Default has occurred.
31. [Redacted] has the ownership of the assets of Pacific Solar transmitted to it by the Assets Trust Agreement and the profits generated by these assets:
For the purposes of the Trust, the Trustee was irrevocably assigned ownership over real property, personal property and rights deriving from material contracts to which PACIFIC SOLAR ENERGY, S.A. DE C.V. was a party …
…
CREATION OF TRUST. The Settlor continues to express that, with the abovementioned background, it hereby assigns to [Redacted], in its capacity as Trustee, free from any and all encumbrances, ownership over the following Trust Property and Rights, so that [Redacted], through its trust office, manage this assignment in strict and full compliance with the purpose of the Trust, and thus administer them pursuant to the rules established in this Trust Agreement and the other Financing Documents: (1) The Project Land Rights […]; (2) The Project Personal Property […]; (3) The economic and other rights deriving from the Project Material Documents and any guarantees issued […] It is especially highlighted that among the rights assigned (without this clarification being considered as a limitation) is the Settlor’s total turnover for the provision of electric power supply services derived from the ENEE PPA contract […].20
32. The two Lenders ARE respectively first-ranking beneficiary and second-ranking beneficiary:
18 Share Trust Agreement, C-266-EN, pp. 4-5. ↩
19 Assets Trust Agreement between Pacific Solar, [Redacted], DEG and FMO (“Assets Trust Agreement”), C-267-EN and C-267-EN (Respondent’s resubmission). The same remark as the one made in footnote 14 applies here concerning the translation presented by the Respondent. ↩
20 Assets Trust Agreement C-267-EN, p. 3 and p. 6. Emphasis in bold in the original, emphasis in bold and underlined added. ↩
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First-Ranking Beneficiary means DEG-Deutsche Investitions-und Entwicklungsgesellschaft mbH. […] Second-Ranking Beneficiary means Nederlandse Financierings-Maatschappij Voor Ontwikkelingslanden N.V.
…
PURPOSE OF THE TRUST: The Settlor continues to state that ownership over the Trust Property and Rights is assigned for the following irrevocable, inalterable and unmodifiable purposes: 7.1) Guarantee Purpose: The primary purpose of this Trust is to ensure that all Trust Assets and Rights are, at all times, maintained and constituted as an autonomous estate in order to serve as a payment guarantee for the Secured Obligations that the Settlor assumes before the Creditors in their capacity as Secured Beneficiaries in this Trust […].21
33. The Settlor, Pacific Solar, MIGHT BECOME the third-ranking beneficiary in the future, only if and when the loans have been fully reimbursed:
Once all outstanding amounts payable to the Lenders have been satisfied, as evidenced by the proof of payment issued by the Agent Bank and addressed to the Trustee by the latter, as well as the outstanding obligations to any other First-Ranking or Second-Ranking Beneficiary that subsequently acquires such status, ownership of the Trust Property and Rights assigned by the Settlor shall be returned in full to the Settlor, which to this end shall become the Third-Ranking Beneficiary.22
34. Moreover, if the loan is not repaid and there is an Event of Default, the rights of the third-ranking beneficiary will never materialize, as the Trustee will take possession of the assets and sell them for the benefit of the Lenders:
[…] upon receipt of the notice issued by the Agent Bank regarding an Event of Default and an instruction to foreclose on the Trust Property and Rights, the Trustee shall take any necessary steps to conduct the sale and disposal of the Trust Property and Rights through a Public Auction, with immediate effect, and as a result, deem the Loan for Use Agreement terminated for such reason, take possession of all the Trust Property and Rights for the benefit of the Lenders (assuming their custody and conservation), and initiate the process to liquidate or dispose of the Trust Property and Rights as provided for in this Trust […].23
35. This means that the third-ranking beneficial ownership has no substance at the present time, when the Tribunal has to decide the case, as it will only possibly materialize in the future when the first-ranking beneficiary and the second-ranking beneficiary have been fully satisfied, i.e., when the loans have been entirely repaid, or never materialize if there is an Event of Default. Pacific Solar has no right to any benefit as long as the
21 Assets Trust Agreement, C-267-EN, p. 5 and p. 7. Emphasis in bold in the original, emphasis in bold and underlined added. ↩
22 Assets Trust Agreement, C-267-EN, p. 8. Emphasis in bold and underlined added. ↩
23 Assets Trust Agreement, C-267-EN, pp. 8-9. Emphasis in bold and underlined added. ↩
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Trust is in place and might only obtain the return of its assets if and when the loan has been fully reimbursed and no Event of Default has occurred.
36. It must be noted that it is clearly stated that the rights of the third-ranking beneficiary might only come into existence in the future and have no effect and no substance at present, as mentioned in the Assets Trust Agreement, indicating that Pacific Solar will only “become” the third-ranking beneficiary at a time in the future, if and when the loans have been fully reimbursed and no Event of Default has occurred.
37. There is a well-established line of jurisprudence holding that international law does not protect rights that are merely contingent, speculative or uncertain. A potential property right or one that is conditional in that it may or may not materialize depending on a future event is not protected by international law.
38. Some case law can be cited here, to the effect that it is only acquired rights existing at the time when they are invoked and not future contingent rights that can be protected under international law.
39. The tribunal in Apotex v. United States has clearly made reference to the principle that rights which have not materialized at the time when a claim is based upon them, cannot be protected under international law and that the tribunal therefore lacks jurisdiction over such a claim:
Whether or not each of Apotex’s ANDAs [Abbreviated New Drug Application] would have been granted final approval is by no means certain on the evidence. But in any event, the critical enquiry must be as to the nature of the alleged “property” as at the date of the alleged breach – not at some future point.
The jurisdictional issue here turns upon the inherent nature of the relevant ANDAs, not the nature of Apotex’s rights over them. As set out above, even assuming that the ANDAs were Apotex’s exclusive “property”, they remained no more than applications for permission to (in this case) export, and as such neither fell within NAFTA Article 1139(g), nor constituted “investments” as contemplated more generally by NAFTA Chapter Eleven.
In the light of the above considerations the Tribunal hereby unanimously Orders and Awards as follows:
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(a) Apotex does not qualify as an “investor”, who has made an “investment” in the U.S., for the purposes of NAFTA Articles 1116 and 1139, and accordingly both the Sertraline and Pravastatin Claims are hereby dismissed in their entirety, on the basis that the Tribunal lacks jurisdiction in relation thereto.24
40. The case of Eureko v. Poland was also dealing with a contingent right and the crystallization of such right. The tribunal in that case stated both that a contingent right cannot be protected under international law “as long as the contingency has not been realized”,25 and that it can be protected when it has “crystallized.”26
41. I take the liberty to mention that a similar approach can be found in my thesis, “Le préjudice dans la théorie de la responsabilité internationale”:27
Toujours est-il que le simple espoir d’acquérir un droit doit être distingué du droit d’acquérir un droit, seul ce dernier étant protégé. C’est vraisemblablement un droit de ce genre que M. Ago qualifie d’expectative …28
Nevertheless, the mere hope of acquiring a right must be distinguished from the right to acquire a right, only the latter being protected. It is likely this kind of right that Mr. Ago refers to as an expectation.
42. Numerous investment tribunals have also concluded that they have no jurisdiction ratione materiae to entertain a claim of expropriation29 when the Claimant did not have an existing vested right under the relevant domestic law.30
24 Apotex Inc. v. United States of America, ICSID Case No. UNCT/10/2, Award on Jurisdiction and Admissibility, 14 June 2013, RL-162, ¶ 215, ¶ 224 and ¶ 358 (a). Emphasis added. ↩
25 Eureko B.V. v. Republic of Poland, UNCITRAL Partial Award, 19 August 2005, CL-085-EN [hereinafter, “Eureko v. Poland”], ¶ 151. ↩
26 Eureko v. Poland, ¶ 152. Emphasis added. ↩
27 Brigitte Bollecker-Stern, Le préjudice dans la théorie de la responsabilité internationale, Paris, Pedone, 1973, 382 p. (Préface de Paul Reuter), p. 148. ↩
28 In his pleading in the Barcelona Traction case, C.R. 144, p. 57. ↩
29 It can be noted here that in their Memorial on the Merits, ¶ 414, the Claimants present a claim of expropriation:
For the foregoing reasons, Claimants respectfully request an award: ↩
(a) declaring that Honduras has breached its obligations under the Treaty, including its obligations:
(i) under Article 10.7 not to expropriate Claimants’ investment except if made for a public purpose, in no case discriminatory, on payment of prompt, adequate and effective compensation, and in accordance with due process.
30 Generation Ukraine, Inc. v. Ukraine, ICSID Case No. ARB/00/9, Award, 16 September 2003, CL-179, ¶ 20.26: “A plea of creeping expropriation must proceed on the basis that the investment existed at a particular point in time.”; International Thunderbird Gaming Corp. v. United Mexican States, UNCITRAL, Award, 26 January 2006, CL-038, ¶ 208: “compensation is not owed for regulatory takings where it can be established that the investor or investment never enjoyed a vested right in the business activity that was subsequently prohibited.”; Merrill & Ring Forestry L. P. v. Canada, ICSID Case No. UNCT/07/1, Award, 31 March 2010, CL-110, ¶ 142: “The right concerned would have to be an actual and demonstrable entitlement of the investor to a certain benefit under an existing contract or other legal instrument. […] Expropriation cannot affect potential interests.”, ¶ 215: “The Tribunal has also concluded in respect of expropriation that a potential and eventual benefit relating to export ↩
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43. The majority recognizes that it “is generally – albeit not unanimously – accepted that, in cases where nominal ownership does not coincide with beneficial ownership, it is the latter that enjoys protection under international law”.31 This jurisprudence has been referred to in my Dissenting Opinion in Occidental, as has been mentioned by the Respondent, as cited in the Decision:
Professor Stern similarly notes in her dissenting opinion to the award in Occidental v. Ecuador that, in those cases of imperfect dominion, “international law favours the beneficial owner.”32
44. I stand by this position, which I can cite in full here, with references to case law and doctrine:33
As far as the position of international law towards beneficial owners, in cases where the legal title and the beneficial ownership are split, is concerned, it is quite uncontroversial, after a thorough review of the existing doctrine and case-law, that international law grants relief to the owner of the economic interest.
The fact that international law favours the beneficial owner has been recognized by the doctrine34; the case-law of the Iran-US Claims Tribunal35 which has always considered the beneficial owner of the legal interest rather than the legal owner when there was a split of title, as well as ICSID tribunals’ decisions.36
45. It is indeed important to examine different factual situations in order to understand the contours of the protection granted by international law to beneficial owners.
prices cannot be affected by an alleged act of taking because it has not materialized in an existing contract and there is thus no actual contractual right that can be protected as an intangible interest.”
31 Decision, ¶ 306. ↩
32 Decision, ¶ 243. ↩
33 Dissenting Opinion of Arbitrator Brigitte Stern in Occidental Petroleum Corporation and Occidental Exploration and Production Company v. Republic of Ecuador, ICSID Case No. ARB/06/11, RL-161, ¶¶ 148-149. ↩
34 See for example, Margaret Whiteman’s Digest of International Law, vol. 8, RL-121, pp. 1261-1262, in particular: “Where the beneficial owner of property, with respect to which claim was made before … the Commission … was a national of the United States, and where the legal owner or nominee was a non-national of the United States, the Commission allowed claims, if otherwise eligible. But where the legal owner or trustee was a national of the United States, and the beneficiary or cestui que trust was a non-national, in claims before that Commission, the claims were denied.” ↩
35 James M. Saghi, Michael R. Saghi and Allan J. Saghi, Claimants, v. The Islamic Republic of Iran, Case No. 298, 29-Iran.U.S.C.T.R. p. 20, with references to many other cases. ↩
36 See, for example, Waguih Elie George Siag and Clorinda Vecchi v. Arab Republic of Egypt, ICSID Case No. ARB/05/15, Award, 1 June 2009, CL-022-EN, ¶¶ 87-90. ↩
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46. The case of Occidental, mentioned in the Decision, did not imply a Trust, but a Farmout Agreement. This concerned an oil concession in Block 15 exploited by OEPC, which kept the legal title but transferred a 40% beneficial ownership in Block 15 to AEC, in exchange for certain capital contributions by AEC. AEC’s beneficial ownership consisted of 40% of OEPC’s share in the crude produced from Block 15.
47. In other words, the beneficial ownership existed as soon as the Farmout Agreement was signed and granted immediately profits to its holder, derived from the oil received.
48. Another example of a more classical trust than the two Trusts mentioned and analysed so far, where the beneficial owner was the primary beneficiary (and not a second- or third-ranking beneficiary) who enjoyed immediate and exclusive benefits, is the Family Trust, between Mr. Paiz and Mrs. Paiz on the one hand and [Redacted] on the other hand, which was a contractual arrangement dated 10 June 2015 in the chain of ownership between the Claimants and Pacific Solar:37
1.17 “Primary Beneficiary” means Mr. Fernando Paiz Andrade, resident and citizen of the Republic of Guatemala; and Mrs. Anabella Schloesser de Paiz, resident and citizen of the Republic of Guatemala;
CLASS OF BENEFICIARIES
The Beneficiaries of this Settlement are:
11.1 the Primary Beneficiaries: Mr. Fernando Paiz Andrade and Mrs. Anabella Schloesser de Paiz.
11.2 Such other persons as are added to the class of Beneficiaries […].TRUST INCOME
4.1 The Trustees may during the Trust Period pay transfer or apply the income of the Trust Fund to or for the benefit of any Beneficiaries.
4.2 The Trustees shall accumulate the remainder of the income of the Trust Fund during the Trust Period and may add such income to the capital of the Trust Fund […].38
49. In other words, as was the case for the Farmout Agreement, the beneficial owners were the exclusive beneficiaries and could receive immediately the benefits of their beneficial ownership, as soon as the Family Trust was executed.
37 The [Redacted] (as amended and restated) BETWEEN FERNANDO PAIZ ANDRADE (as Settlor) AND [Redacted] (as Trustees), C-263-EN. ↩
38 Emphasis in bold and underlined added. ↩
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50. The same can be said as far as the Lenders are concerned, as they have an existing and immediate right to receive funds for the purpose of the reimbursement of their loans, and not as asserted by the majority “only […] a contingent right to receive proceeds from their auction sale if they notify the trustee of an event of default.”39
51. In sum, it can be stated that existing beneficial owners are protected by international law.
52. The question here is to determine whether the Tribunal can assert jurisdiction over the claims of the Claimants through the second-ranking beneficiary, [Redacted], in the Share Trust Agreement and on behalf of Pacific Solar as the third-ranking beneficiary in the Assets Trust Agreement, by application of the rules and principles of international law, as exposed in the preceding points.
53. The majority has considered the beneficial ownership of the Lenders and the beneficial ownership of the Settlors, [Redacted] and Pacific Solar to be on the same level. I consider that one of the key errors of the majority is to have ignored the difference between the priority ranking beneficial ownership of the Lenders with the subsidiary beneficial ownership of the Settlors, considering that each of them had a partial beneficial ownership, whereas, in fact and law, the Settlors had only a conditional beneficial ownership:
In the present instance, the Trust Agreements have more than one beneficiary …
In the present instance, therefore, beneficial ownership (and more importantly, ownership within the meaning of the CAFTA-DR) is a bundle of rights, divided between the lenders and the settlors. Both the lenders and the settlors (and through them, the Claimants who as admitted are indirect owners of [Redacted]) have proprietary rights. Because of these proprietary rights, the settlors, and through them the Claimants, together with the lenders, “own” the shares, the Plant and the PPA within the meaning of the CAFTA-DR.40
54. What the majority disregarded is that, in fact and law, the Settlors had only a conditional beneficial ownership. Indeed, there are three stakeholders, which have each different entitlements: the Trustee, which is the legal owner, the two Banks, which are the
39 Decision, ¶ 268. ↩
40 Decision, ¶¶ 318, 319. ↩
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current beneficial owners and the Settlors which are conditional direct and indirect beneficial owners in the future, as will be developed below. And, precisely, another serious error of the majority is to have disregarded the difference between an existing right and a contingent right.
55. I will try to bring some order in the reasoning, first, in distinguishing the claims of the Claimants on their own behalf and their claims on behalf of Pacific Solar, second, in showing that the beneficial ownership of the Lenders and of the Settlors are in what could be called a hierarchical or temporal relationship, the beneficial ownership of the Settlors either coming into existence in a very far future, when the loans are fully reimbursed, or never coming into existence if there is an Event of Default.
56. The answer is undoubtedly no, as the Claimants can only act on behalf of a company of the host State, while [Redacted] is a company registered in the Bahamas.
57. I quote here the conclusions of the majority relating to the rights of the Claimants that can be protected under international law, after the signature of the Trust Agreements:
First, the Claimants’ actual right to protect their future right to recoup the shares, the Plant and the PPA gives them standing to request declarations of breach and orders not to aggravate the dispute. Such requests are essential to protect the future right to recoupment and are not contingent on the economic value of the rights concerned. The Claimants thus have standing to request an award, as stated in their Memorial:
(a) declaring that Honduras has breached its obligations under the Treaty […]
(b) declaring that the Agreements are investment agreements as defined by the CAFTA-DR and that Honduras has violated its obligations under the Agreements;
(c) ordering the Republic of Honduras to […] refrain from aggravating the dispute
Second, as concerns the compensation claimed for losses arising from any Treaty breaches including both interest and costs, a majority of the Tribunal (with Arbitrator Drymer dissenting) considers that the Claimants’ claim for compensation on their own behalf by reference to the damage allegedly suffered by Pacific Solar would be fragile indeed. This is because their corporations’ status
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as so-called second- or third-ranking beneficiaries,[41] combined with the difficulties they are facing to reimburse the first-ranking beneficiaries, drastically reduces the present-day economic value of their rights.
… the Claimants’ effectively recouping their shares, the Plant and the PPA is too hypothetical in nature to found their standing now to request other than symbolic reparation on their own behalf.42
58. If I understand correctly the position of the members of the majority, they consider, on the one hand, that after the signature of the Trusts Agreements, the right of the Claimants to claim on their own behalf is too hypothetical to be protected by international law, in other words that this right is presently inexistent, while, on the other hand, they affirm the existence of a right to protect an inexistent right, which is the basis for what they call a symbolic reparation. I must confess that I find this illogical, contradictory and at odds with the usual concepts of international law relating to State responsibility.
59. But what is more, I find this conclusion also in stark contradiction with the position adopted by the majority in relation to the claim presented by the Claimants on behalf of Pacific Solar, as will be explained now.
60. The majority rejects the preliminary objection relating to the claim of the Claimants on behalf of Pacific Solar:
The Claimants’ ownership (through the status of their corporations as third-ranking beneficiaries) gives them standing to bring that claim on behalf of Pacific Solar pursuant to CAFTA-DR Article 10.16.1(b). The damage or loss allegedly sustained by Pacific Solar is, if established, direct and effective.43
61. In other words, a claim of the Claimants for “compensation on their own behalf by reference to the damage allegedly suffered by Pacific Solar would be fragile” and “too hypothetical”,44 but a claim of the Claimants on behalf of Pacific Solar, for compensation by reference to the damage allegedly suffered by Pacific Solar has to be entertained as the damage, “if established, would be direct and effective.”
62. I find no justification for this distinction. The position of the majority seems to me contradictory, at best. A door has to be open or closed. A claim has to be able to be
41 To be noted, the Claimants are not themselves beneficiaries. ↩
42 Decision, ¶¶ 328-330. Emphasis added. ↩
43 Decision, ¶ 339. ↩
44 Decision, ¶¶ 329, 330. ↩
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presented or not. A right does exist or does not exist. A damage is too hypothetical or is not too hypothetical.
63. Naturally, this conclusion also implies that the Claimants own or control directly or indirectly Pacific Solar. This is another issue on which I strongly disagree with the majority, which considered that the Claimants own but do not control Pacific Solar, as will be developed further.
64. It is not contested that the Claimants can only present a claim on behalf of Pacific Solar, if it is “an enterprise of the respondent that is a juridical person that the claimant owns or controls directly or indirectly.”
65. It is not contested that Pacific Solar is a Honduran company. The issue that remains to be analysed is whether Pacific Solar is owned or controlled directly or indirectly by the Claimants.
66. The majority concludes that Pacific Solar is indeed owned by the Claimants, while considering that it is not controlled, which on its face appears contradictory. A shareholder who “owns” a company also controls it, while it is of course possible to control a company without owning it by majority or in full.
67. Today, the Claimants do not own Pacific Solar. The legal title to ownership of the shares of Pacific Solar belonging to [Redacted] have been transferred to the Trustee, [Redacted]. This is not contested. The Claimants have a direct ownership of 0,01% of the shares of Pacific Solar and an indirect beneficial ownership in 99,90% the shares of Pacific Solar, which might or might not crystallise in the far future, depending on whether or not a pre-condition is fulfilled. This legal situation clearly cannot be equated with ownership of Pacific Solar. In other words, the claim on behalf of Pacific Solar is only, in my view, a potential future claim of indirect ownership.
68. This has been underlined by the Respondent, in the Reply:
The mere possibility of Pacific Solar receiving benefits from the putative investment is conditional upon it having fulfilled its debt obligations to DEG and FMO.
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At no time is Pacific Solar or its shareholders expected to receive income from the Nacaome I Plant while the trustee holds the assets and shares.
In conclusion, Claimants cannot claim that they are the beneficiaries of the alleged investment, because at least since 2018 they assigned all revenues from the Nacaome I Plant in favour of their creditors, DEG and FMO. Furthermore, they have not submitted evidence to show that they have regained title to Pacific Solar’s shares, assets, and right to the revenues of the Nacaome I Plant as of the date of the commencement of this arbitration.45
69. The same analysis was presented again to the Tribunal by the Respondent during the Hearing:46
[Redacted]
PRESIDENT ANGELET: [Redacted]
[Redacted]
MR. SOLIMANO: [Redacted]
[Redacted]
70. In fact, there is an extremely high risk that the rights linked with the status of the Claimants as beneficial owners will either materialize in a very far future or will not materialize at all. The situation of the Claimants is indeed based on multiple extreme contingencies and uncertainties.
71. First uncertainty: the full reimbursement of the debt in the very far future.
45 Reply on Jurisdiction, ¶¶ 166, 169 and 170. Emphasis added. ↩
46 D3:PP490-491:L16-22 & 1-15 (Solimano). Emphasis added. ↩
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72. In order for the second-ranking right to materialize, there is an important condition. [Redacted] has only a contingent right to have its shares in Pacific Solar recouped, if there is a full reimbursement of the debts of Pacific Solar. In order to try to justify the similar treatment of the beneficial ownership of the Settlors and the beneficial ownership of the Lenders, the majority stated the following:
While the exercise of the settlors’ right to recoupment is conditional on the full repayment of the loans, similarly, the lenders only have a conditional right to receive Pacific Solar’s shares, the Plant and the PPA unless upon the occurrence (and notice) of an “event of default”, which had not happened at the time of the Request for Arbitration.47
73. What the majority overlooks is that the Lenders have also an actual existing right to receive funds in order to repay their loans and interests.
74. It appears from the file and the witness statement of Mr. [Redacted] during the Hearing that the full reimbursement of the debt might only occur in a very far future. Mr. [Redacted] questioned by Arbitrator Stephen Drymer48 has recognized that [Redacted] as of the date of the Hearing and indicated that the loan [Redacted] with the consequence that Mr. Paiz might only recover its status as shareholder on which his claims are based on this far away date. And as Arbitrator Drymer commented: “[Redacted]” Mr. [Redacted] also added spontaneously that “[Redacted]”. As the PPA extends 6 years later, Mr. [Redacted] indicated that “[Redacted]”. [Redacted]. I do not see how we could now satisfy a claim that might not even be based on a right possibly coming into existence in [Redacted].
75. Second uncertainty: the existence of an Event of Default.
76. In case an Event of Default occurs, both Trust Agreements provide that the Trustee can either transmit respectively the shares or the assets to the Lenders, or proceed to an
47 Decision, ¶ 320. ↩
48 D2:P452. ↩
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auction whose benefits should then be delivered to the Lenders. In this case, the beneficial ownership of the Claimants will never come into existence.
77. In fact, if we look at the whole picture, the Claimants will only be very hypothetical future and indirect shareholders of Pacific Solar, if and when they recover theirs position of shareholders in a company being a third-ranking beneficiary of the Assets Trust Agreement. This means that they cannot be considered today as the indirect owners of Pacific Solar.
78. In conclusion, I consider that Claimants’ beneficial rights of ownership of the shares of the local company, Pacific Solar, cannot be a basis for an international protection claim on behalf of this company.
79. Control is the ability to make the major corporate decisions for a company. In my understanding, today the Claimants do not control Pacific Solar, as there is neither de jure control nor de facto control.
80. There is no de jure control.
81. Control de jure lies with majority shareholders – in other words, any individual or group holding at least a 51% stake, or with some other contractual arrangement granting the power to control to some entity or some group of shareholders.
82. As I have demonstrated that at present, there is no indirect ownership by the Claimants of 99,9% of the shares of Pacific Solar, as the ownership belongs to [Redacted], there is neither a basis to find that there exists a control of the Claimants resulting from this majority ownership.
83. To make an exhaustive analysis, it can be noted that, by virtue of the Share Trust Agreement, [Redacted] has some rights, as a former shareholder of Pacific Solar, stemming from its beneficial ownership of the shares:
EXERCISE OF SHAREHOLDER RIGHTS: Inasmuch as the Borrower shares constitute the instruments necessary to exercise and prove shareholder rights, [Redacted] will exercise the political and economic rights derived from the ownership of the shares, for which purpose it shall hold a Power of Attorney granted by the TRUSTEE, as the legitimate holder of the shares. However, it may not exercise voting rights in the
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case of any resolution to be adopted at a General and/or Special Shareholders’ Meeting that may cause detriment to the conditions established in this Trust Agreement.49
84. This could appear, in a superficial approach, to give [Redacted] and through it to the Claimants, a control of Pacific Solar.
85. However, the alleged power of control of the Claimants through their indirect beneficial ownership of the shares of Pacific Solar – the Borrower – has a double limitation: first, it depends on a procedural requirement, the granting of a power of attorney by [Redacted]; and second it has limitations as to the substance of the decisions that can be adopted. As indicated by the Respondent, no power of attorney has been produced and there is therefore no legal basis for the Claimants to exercise control over Pacific Solar:
It follows from the foregoing that [Redacted] cannot hold meetings and vote without a mandate or proxy from [Redacted] as trustee. Claimants have failed to produce such a mandate or proxy in the present arbitration. Therefore, they have not shown that they exercise or have exercised control over Pacific Solar.50
86. The majority in fact follows the analysis presented by the Respondent, to conclude that there is no control:
Under the Share Trust Agreement, [Redacted] cannot hold meetings and vote in Pacific Solar’s shareholders meetings without a mandate or proxy from the trustee, [Redacted]. Given that the “Claimants have failed to produce such a mandate or proxy in the present arbitration”, they have not proven that they exercise or have exercised control over Pacific Solar.51
87. If the fact that there is no de jure control is a correct conclusion, it is however in sharp contradiction with the earlier conclusion of the majority finding that there is ownership.
88. For my part, there is simply no de jure control, as there is no indirect ownership by the Claimants of 99,9% of the shares of Pacific Solar.
89. There is no de facto control.
49 Share Trust Agreement, C-266, p. 6. ↩
50 Reply on Jurisdiction, ¶ 180. ↩
51 Decision, ¶ 253. ↩
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90. The Claimants invoke a certain number of elements in order to try to prove that they exercise de facto control: day-to-day management of the company52, position of Mr. Paiz as the President of the Board of Directors53 of Pacific Solar, some instructions given by Pacific Solar to make payments to their contractors.
91. On the one hand, the Claimants rely on their day-to-day management of Pacific Solar in order to argue that there is de facto control by the Claimants:
Claimants make all important decisions related to Pacific Solar, including day-to-day operations […].54
92. First, investment tribunals have established that mere managerial control over the investment is insufficient to obtain treaty protection.
93. For example, the tribunal in Gramercy indicated the following:
The tribunal made a clear distinction between “de facto” control derived from agreements between minority shareholders and a distinct “de facto” control exerted by the managers of the company. This latter control, without ownership is not sufficient to grant protection under the treaty […]. B-Mex supports this Tribunal’s conclusion that managerial control is not sufficient for an investor to acquire standing under the FTA.55
94. Second and even more importantly, all the acts performed in order to manage Pacific Solar performed by Mr. [Redacted] and Mr. Paiz are authorised by a Loan for use agreement given by [Redacted], which can revoke this Loan for use at any time:
TWELVE: LOAN FOR USE AGREEMENT: [Redacted] continues to represent, in her aforementioned capacity, that her representative, as Provider [[Redacted]], owns and is in legitimate possession of the Trust Property and Rights described in Section Five of this Instrument through the related Trust, and that having so instructed and agreed with the Settlor, in its capacity as Recipient [Pacific Solar], in compliance with the conditions agreed in this Instrument and in the Financing Documents, she
52 See for example Rejoinder on Jurisdiction, ¶ 8, ¶ 178, ¶ 271 and ¶ 306. ↩
53 See for example Claimants’ Rejoinder on Jurisdiction, ¶ 271: “Moreover, since the purchase of Pacific Solar in December 2014, Mr. Paiz has continuously held the position of president of the board of directors of Pacific Solar.” And ¶ 306: “Since the purchase of Pacific Solar in December 2014, Mr. Paiz has held the position of president of the board of directors of Pacific Solar without interruption. In addition, Mr. Paiz’s close collaborator, Mr. [Redacted] has also been a director since that time.” ↩
54 Rejoinder on Jurisdiction, ¶ 8. ↩
55 See Gramercy Funds Management LLC, and Gramercy Peru Holdings LLC v. Republic of Peru, ICSID Case No. UNCT/18/2, Final Award, 6 December 2022, CL-290-EN, ¶¶ 646-647; B-Mex, LLC and others v. United Mexican States, ICSID Case No. ARB(AF)/16/3, Partial Award, 19 July 2019, CL-189-EN, ¶ 246. Emphasis added. ↩
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hereby grants a revocable loan for use over the operational assets assigned in Trust in accordance with this Instrument, which are received by the Recipient in accordance with the following conditions […].
12.3) Term and Termination of the Loan for Use Agreement: It is understood that for and in consideration of the currently existing debts of the Recipient related to the Project, which were assumed through the Financing Documents under the conditions listed therein, this Loan for Use Agreement shall remain in effect for as long as full payment of the Secured Obligations is outstanding. This Loan for Use Agreement may be terminated before the established term by mutual, express and written agreement of the parties. However, and considering its legal nature as a gratuitous and mere use contract, this Loan for Use is essentially revocable at any time, at the sole and exclusive discretion of the Provider, in accordance with the terms set forth in the Trust Agreement.56
95. Third, it can be added that in case of the occurrence of an Event of Default, the Trustee will terminate all alleged control over the Plant:
[…] if the Trustee receives notice of an Event of Default from the Agent Bank in the manner provided for in the Trust Agreement, then the Provider shall, without further notice, terminate this Loan for Use Agreement without any liability if so instructed by the Agent Bank (acting upon the instructions of the Lenders), and the Recipient shall, without objection or opposition, immediately allow the Provider [the Trustee], through a duly authorized officer, to take full material and administrative possession of the Project.57
96. In other words, all the elements of the record indicate that there is no de facto control over the operations of Pacific Solar, which are performed by virtue of a revocable loan for use agreement granted by [Redacted], which is a kind of subcontracting agreement or lease contract.
97. First, it is worth noting that Mr. Paiz is neither a signatory of the Trusts, nor is he even mentioned in these documents. The custodian for the functioning of the loan for use provided for in the Assets Trust Agreement is Mr. [Redacted], Project Manager at Pacific Solar:
12.7) Designation of the Custodian: Without this designation meaning in any way reduction in or exemption of liability on the part of the Settlor towards the Provider, [Redacted] is hereby designated for the purpose of assuming before the Provider, in a personal and ad honorem capacity – that is, without any fee, remuneration or compensation – responsibility for the
56 Asset Trust Agreement, C-267-EN, p. 14. Emphasis in bold and underlined added. ↩
57 Asset Trust Agreement, C-267-EN, p. 14. Emphasis in bold and underlined added. ↩
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safekeeping, custody, management, maintenance and operation of the property subject to the loan for use, without any distinction. [Redacted] shall be jointly and severally liable for the obligations derived from this Loan for Use Agreement, specifically for the purposes of the civil or criminal liability that may arise in the event of loss, theft, relocation without authorization, undue retention in the event of revocation of the Loan for Use Agreement and any other act that may affect the assets subject to the loan for use, before the Provider.58
98. Second, the president of a board of director does not control the company. While a board of directors might sometimes look like it holds the ability to control, it ultimately lies with majority shareholders – in other words, any individual or group holding at least a 51% stake or having some contractual arrangement giving the control to some of the shareholders.
99. Contrary to what the Claimants argue in their submissions, the Claimants have no control over the use of the money generated by the activities of Solar Energy. [Redacted] and not the Claimants decide on how the money is to be distributed between the Lenders on the one hand and Pacific Solar for their management of the Plant, on the other hand, as was indicated to ENEE (Empresa Nacional de Energía Eléctrica) in a letter of 12 January 2018:59
As part of the Financing Documents, the Company will enter into an amending agreement to the guarantee trust agreement in favor of [Redacted] (the “Trustee”), constituted on December 7, 2016
[…]
In consideration of the aforementioned background, the Company hereby notifies ENEE of the following:
1. That the Company will enter into the Financing Documents in accordance with the right granted by Section 20.6 of the Twentieth Clause of the PPA.
2. The Company will proceed with the encumbrance and assignment in guarantee of all the rights granted by the PPA in favor of the Trustee, for the benefit of the Financial Institutions, by means of the execution of the Trust Agreement.
3. That ENEE shall follow the written instructions issued by the Trustee on behalf of the Financial Institutions or by the Agent Bank on behalf of the Financial Institutions, in all matters relating to the deposit of any sum of money to which the Company is entitled under the PPA, including, without
58 Asset Trust Agreement, C-267-EN, p. 16. Emphasis added. ↩
59 Carta de Pacific Solar Energy S.A. a J. A. Mejía Arita (ENEE), 12 January 2018, R-037-EN, pp. 2-3. Emphasis added. ↩
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limitation, payment for energy and capacity, and any other amounts pursuant to the provisions of the PPA.
100. No element of the file indicates the existence of a control by the Claimants over Pacific Solar.
101. In conclusion, the Claimants have no standing to claim for themselves, they have no standing to claim for [Redacted], which is a company of the Bahamas, and they have no standing to claim for Pacific Solar, because, at present, they neither own nor control directly or indirectly that company. I consider therefore that the Tribunal has no jurisdiction ratione materiae and that the objection of the Respondent should have been accepted.
[Redacted]
Brigitte Stern
Arbitrator
Date: 20 July 2026