Michael Anthony Lee-Chin v. Dominican Republic

Case summary

At a glance

Parties: Michael Anthony Lee-Chin (Jamaica) v. the Dominican Republic
Case no.: ICSID Case No. UNCT/18/3
Forum and rules: UNCITRAL Arbitration Rules (1976), with ICSID as Administering Authority; place of arbitration Washington, D.C.
Treaty: Agreement on Reciprocal Promotion and Protection of Investments, Annex III to the Agreement Establishing the Free Trade Area between CARICOM and the Dominican Republic (signed 22 August 1998, in force 5 February 2002)
Tribunal: Prof. Diego P. Fernández Arroyo (President), Mr. Christian Leathley, Prof. Marcelo Kohen
Sector: Waste management; landfill concession
Outcome: Jurisdiction upheld by majority (15 July 2020). The Final Award of 6 October 2023 found breaches of the expropriation, fair and equitable treatment and umbrella clause obligations; Prof. Kohen dissented on both awards. The Respondent's request for rectification was dismissed (29 February 2024).
Amount: Claimed: USD 583.6 million to USD 596.1 million in damages, plus USD 5 million in moral damages. Awarded: USD 43,590,090 (USD 4,880,609 for the failure to update tipping fees and USD 38,709,481 for Lajun's shares), with interest compounded annually. Each party bears its own costs and 50% of the arbitration costs. In the rectification proceeding, the Respondent was ordered to pay all costs, including the Claimant's costs (claimed at USD 123,243.91), arbitrators' fees of USD 19,253.16 and direct expenses of USD 1,974.85.

The dispute

Lajun Corporation, S.R.L. held a Concession Agreement of 1 March 2007 with the Municipality of Santo Domingo Norte (ASDN) to operate the Duquesa Landfill. On 26 June 2013 Mr. Lee-Chin, a Jamaican national, acquired an indirect 90% interest in Lajun and in the land under the landfill through Panamanian and Dominican companies (Lution, Kigman, Nagelo and Wilkison). After disputes over rescission, two settlement agreements and environmental sanctions, the ASDN sued in 2017 to annul the concession. On 27 September 2017 the Superior Administrative Court placed the landfill under a State commission, which took control the next day; the court annulled the concession on 25 October 2018. Mr. Lee-Chin claimed expropriation, breach of fair and equitable treatment and full protection and security, arbitrary and discriminatory measures, breach of the umbrella clause and of most-favoured-nation treatment. The Dominican Republic objected that Article XIII of the treaty contains no unilateral offer to arbitrate under the UNCITRAL Rules and that the treaty does not protect indirect investments; it later raised further admissibility objections.

Key holdings

The Tribunal held unanimously that Article XIII(1) ("shall … be submitted") imposes a binding obligation to submit investor-State disputes to one of three fora: the host State's courts, national arbitration or international arbitration. Partial Award on Jurisdiction ¶ 94
By majority, the obligation in Article XIII(1) is a standing offer of consent by the State. Only the investor can choose among the three options, and the investor perfected the consent by serving the Notice of Arbitration. Article XIII(3), on diplomatic protection, confirms this reading. No separate ex post agreement is required. Partial Award on Jurisdiction ¶¶ 114, 117, 125–127
Absent a special agreement, the tribunal is established under the UNCITRAL Rules, which therefore apply. The Respondent's participation in constituting the Tribunal is not consent to jurisdiction. The majority did not need to address the MFN argument or to resort to supplementary means of interpretation. Partial Award on Jurisdiction ¶¶ 186–198
The broad definition of "investments" in Article I(1) ("every kind of asset … though not exclusively") covers indirect investments. The fact that other treaties expressly mention indirect investments does not show that this treaty excludes them. The rule barring shareholders from claiming for a company's losses belongs to diplomatic protection and does not apply here. Partial Award on Jurisdiction ¶¶ 210–219
Prof. Kohen dissented. In his view, Article XIII leaves the choice of forum to agreement between the disputing parties, so no unilateral consent to international arbitration exists. The MFN clause in Article III cannot import consent. The claimant's fourth-degree indirect holdings are not a protected investor or investment. Kohen Dissent ¶¶ 93–97, 106, 112
The Final Award found that the Respondent breached the treaty's expropriation, fair and equitable treatment and umbrella clause obligations. It awarded USD 43,590,090 with interest based on the yield on Dominican sovereign USD bonds, compounded annually. It rejected all other claims and split the arbitration costs equally. Decision on Rectification ¶ 8 (quoting the Final Award)
The Respondent sought rectification of the discount rate, the 2026–2034 cash flows and the omitted deduction of Lajun's debt. The Tribunal held that these challenge its choice of parameters and methodology, not computation errors under Article 36(1) of the UNCITRAL Rules. It dismissed the request and the alternative request for an additional award, and ordered the Respondent to bear all costs of the rectification proceeding. Prof. Kohen agreed with the dismissal in a separate statement. Decision on Rectification ¶¶ 63–73, 83–85