Dominican Republic Investment Protections

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1. INTERNATIONAL LAW INVESTMENT PROTECTION FRAMEWORK

The International Center for the Settlement of Investment Disputes (ICSID) Convention (the “Convention”) was signed by the Dominican Republic on March 20, 2000.[1] However, at this time the Convention has not been ratified in accordance to the Constitution, which requires approval by the National Congress.[2]

The Dominican Republic has entered into several investment promotion and protection agreements. The Dominican Republic's first treaty entered into was a Friendship, Commerce and Navigation Treaty with the Federal Republic of Germany on December 23, 1957. The treaty was ratified the on February 5, 1958. The following [list] represents a compilation of Bilateral Investment Treaties (BITs) to which the Dominican Republic is a party: Spain, which was signed on 16 March 1995 and entered into force on 7 October 1996; France, which was signed on 14 January 1999 and entered into force on 30 October 2002; the Republic of China, which was signed on 5 November 1999 and entered into force on 27 November 2001; Chile, which was signed on 28 November 2000 and entered into force on 8 May 2002; Ecuador, which was signed on 26 June 1998 and entered into force on 4 November 2006; Argentina, which was signed on 16 March 2001; the Confederation of Switzerland, which was signed on 27 January 2004 and entered into force on 12 March 2006; Morocco, which was signed on 23 May 2002 and entered into force on 4 January 2007; Panama, which was signed on 6 February 2003 and entered into force on 18 September 2006; Finland, which was signed on 27 November 2001 and entered into force on 21 April 2007; the Netherland Kingdom, which was signed on 30 March 2006 and entered into force on 29 August 2007; Italy, which was signed on 12 June 2006 and entered into force on 18 July 2007; and Korea, which was signed on 30 June 2006 and entered into force on 21 May 2008.

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2. INVESTMENT DISPUTES

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The Foreign Exchange Direction of the Industry and Commerce Ministry of the Dominican Republic is the national authority responsible for the management of dispute resolution derived from Free Trade Treaties and Investment Agreements signed by the Dominican Republic.[3] . . .

These disputes actually represent three cases brought against the Dominican Republic, all related to investments in the electric distribution company, Empresa Distribuidora de Electricidad del Este (EDE Este). At the time of the disputes, EDE Este, the company which was the point of investment, had 50% of its share capital divided and controlled between the Dominican Energy Holdings, LP, and the Dominican State. Dominican Energy Holdings LP was owned by TWC, which was in turn owned by Société Général. The cases were brought by three different entities from within the same investor group:

• Société Générale in respect of DR Energy Holdings Ltd and Empresa Distribuidora de Electricidad del Este, S. A., v. Dominican Republic ("Société Générale")[4]
• TCW Group, Inc., and Dominican Energy Holdings, L.P., v. Dominican Republic ("TWC")[5]
• Empresa Distribuidora de Electricidad del Este, S. A., vs. Corporación Dominicana de Empresas Eléctricas Estatales, as successor of the Corporación Dominicana de Electricidad[6]

The Société Générale case was brought under the French-Dominican Republic BIT, while the TCW case was brought under the DR-CAFTA. Both cases proceeded under the UNCITRAL Arbitration Rules. The EDE Este case was brought to the ICC. All three cases involved allegations regarding the State’s conduct in regulating the electric distribution industry, which had been privatized in 1999 and purchased by the investors in 2004.

[1] ICSID List of Contracting States and Signatories of the Convention.

[2] Dominican Republic Constitution, Art. 37.

[3] Decree No. 610-07, Establishing the National Coordinating Authority (Dominican Republic) (23 Oct. 2007).

[4] Société Générale in respect of DR Energy Holdings Ltd and Empresa Distribuidora de Electricidad del Este, S. A. v. Dominican Republic ("Société Générale"), LCIA Case No. UN 7927.

[5] TCW Group, Inc. and Dominican Energy Holdings, L.P. v. Dominican Republic (DR-CAFTA) ("TCW"), Consent Award (16 Jul. 2009).

[6] Empresa Distribuidora de Electricidad del Este, S. A., vs. Corporación Dominicana de Empresas Eléctricas Estatales, como sucesora de la Corporación Dominicana de Electricidad (CCI Caso No.15749/JRF).