Overview
(November 26, 2018, London) — Steptoe has secured a further success at the International Centre for Settlement of Investment Disputes (ICSID) for the von Pezold family in its long-running dispute against the government of Zimbabwe over its racially discriminatory land reform program, in the case of Bernhard von Pezold and Others v Zimbabwe, ICSID Case No. ARB/10/15.
By way of background, in July 2015, an ICSID tribunal awarded the von Pezold family the return of property and damages (alternatively $195 million in damages), plus their full legal costs and interest. The damages awarded were among the highest ever awarded by an ICSID tribunal and represent about 80% of the damages claimed, which is a very high ratio for ICSID arbitrations. In its award, the tribunal found that Zimbabwe had breached the bilateral investment treaties that it has with each of Germany and Switzerland when it expropriated the von Pezolds' property in 2005 pursuant its Land Reform Programme, and also treated the von Pezolds unfairly and inequitably in regard to their foreign exchange earnings. The most significant finding of the award was that Zimbabwe expropriated the von Pezolds' property because of the color of their skin.
Zimbabwe subsequently sought the annulment of that award.
On November 21, 2018, the ICSID annulment committee hearing Zimbabwe's annulment application dismissed that application in its entirety, and ordered Zimbabwe to bear the costs of the proceedings. In its annulment application, Zimbabwe argued that the original tribunal denied it the right to be heard, and was partial as evidenced by its conduct at the oral hearing and due to the fact that the president of the tribunal was also the chair of the World Bank Sanctions Board. The annulment committee held as follows: The tribunal gave Zimbabwe ample opportunity to be heard; the parties do not have a right to an unlimited opportunity to be heard. The president of the tribunal disclosed during the arbitration his position as the chair of the sanctions board, but Zimbabwe failed to act on that information before the arbitration proceeding closed and therefore waived its right to do so.
The committee also noted that, in any event, the sanctions board cannot sanction states and that the sanctions board had not applied any sanctions to World Bank projects in Zimbabwe. There was no evidence on the record to indicate that the tribunal had been partial and indeed at the end of the arbitration hearing, when asked by the president, Zimbabwe confirmed that it had had its day in court and had been treated fairly. A fuller description of the annulment committee's findings can be found in Steptoe's November 26 client alert.
In response to the committee's decision, Heinrich von Pezold commented: "After eight years of arbitration proceedings, the von Pezold family is relieved that the proceedings have been successfully concluded. There is a stark contrast on the one hand between the manner in which Zimbabwe has treated foreign investors whose property it has expropriated and on the other hand the often repeated promise of President Mnangagwa that 'Zimbabwe is open for business.' Foreign investors will not return to Zimbabwe if it does not honor its international obligations. As such, it is of great concern that, as a matter of international law, Zimbabwe is already in breach of its obligation to pay the full compensation due under the award, and that this breach has continued even after President Mnangagwa became president in November 2017. During the annulment phase of the arbitration proceedings, Zimbabwe has stated that it would honor the award if its application to annul the award failed. That application has now failed. In order for Zimbabwe to show its commitment to the rule of law, and willingness to engage with the international community, the von Pezolds call upon Zimbabwe to immediately honor the award per its obligations and promises."
The Steptoe team representing the von Pezold family in this arbitration is led by partner Matthew Coleman with associates Helen Aldridge and Tom Innes.
About Steptoe
In more than 100 years of practice, Steptoe has earned an international reputation for vigorous representation of clients before governmental agencies, successful advocacy in litigation and arbitration, and creative and practical advice in structuring business transactions. Steptoe has more than 500 lawyers and other professional staff across offices in Beijing, Brussels, Chicago, London, Los Angeles, New York, Phoenix, San Francisco, and Washington. For more information, visit www.steptoe.com.
