MEMORIAL OF THE INVESTOR
TABLE OF CONTENTS
A. The CAFTA Claim
1. MFN violations
B. This Memorial
C. The Invasion of Hacienda Santa Fé
E. The American Investor Riverside Coffee, LLC
1. Riverside controlled Inagrosa
2. Riverside's Investments in Inagrosa
F. The Investment - Inagrosa
G. The Respondent - Nicaragua
1. 2018 Civil Society Protests
2. Government Repression of Public Protests
3. Paramilitary Groups Controlled by the State
H. Land Invasions are Part of a Government Policy of Repression
I. Government practice to reward Paramilitaries with private land
1. The Business Sector Denounces the Land Takings
2. Human Rights Abuses
3. Government attack on Due Process
4. Suppression of basic political rights
J. International Community Sanctions Against Nicaragua
II. THE FACTS
A. The Invasion of Hacienda Santa Fé
1. The First Invasion
1. The First Invasion (Upper Santa Fé)
2. The Second Invasion (Lower Santa Fé)
3. The Third Invasion
4. Police escorted Mayor Herrera and paramilitaries into Hacienda Santa Fé
5. Mayor Herrera addressed the Paramilitaries
6. Paramilitaries leave for one day
7. Paramilitaries return the next day
B. Civic Organizations Confirm the Taking of Hacienda Santa Fé
C. Government of Nicaragua directed the Paramilitaries to invade and take possession Hacienda Santa Fé
D. Nicaraguan National Police assisted the Paramilitaries to invade and take Hacienda Santa Fé
E. Consequences of the Invasion
III. AVOCADO PRODUCTION
A. The Avocado
B. Hass Avocado
C. Cultivation - Land preparation:
G. Pest Management
H. Weed Management
IV. PRIVATE FOREST
V. CAFTA TREATY CLAIMS
A. Most Favored Nation (MFN)
1. The Meaning of MFN Treatment
2. The Overriding Economic Considerations of MFN Treatment
3. Better Treatment Provisions in the Russian BIT
4. The Effect of the MFN clause in this claim
C. International Law Treatment
2. Fair and Equitable Treatment
3. Human Rights violations support the meaning of Fair and Equitable Treatment
4. Legitimate Expectations
D. Full protection and security
E. National Treatment
2. Treatment No Less Favorable
3. "With Respect to the Establishment, Acquisition, Expansion, Management, Conduct, Operation, and Sale or Other Disposition of Investments"
VI. THE FACTS APPLIED TO THE LAW
A. International Law of State Responsibility
1. Responsibility for Government Branches ASRIWA Article 4
2. Direction of persons by the State - ASRIWA Articles 8
3. Acknowledgement & Adoption ASRIWA Article 11
B. Facts Demonstrating Expropriation
1. Improper Purpose
2. Failure to Provide Due Process and Fair and Equitable Treatment
3. Failure to Provide Compensation
C. Facts Demonstrating a Breach of Fair and Equitable Treatment
D. Facts Demonstrating National Treatment and Most Favored Nation
A. Compensation for Breaches of Expropriation CAFTA Treaty
B. The Standard of Compensation Fair and Equitable Treatment
C. The Obligation to Pay Damages
D. The Standard of Compensation
F. Arbitration & Legal Costs
VIII. FACTUAL BASIS FOR DAMAGES IN THIS CLAIM
A. Loss of the 2018 Crop
B. Loss of the plant nursery
C. Specific Basis for Damages
1. Avocado Business Valuation
2. Forest Valuation
D. Summary of Valuation Report
IX. MORAL DAMAGES
B. Moral Damages in International Human Rights Law
C. How A Tribunal May Remediate through Moral Damages
D. Case Law supports Claimant's Moral Damages Claim
1. Desert Line Projects v. Yemen
2. Al-Kharafi v. Libya
3. Benvenuti and Bonfant v. Congo
E. Facts supporting Moral Damages
F. Conclusion on Moral Damages
X. THE TRIBUNAL HAS JURISDICTION
A. Temporal Jurisdiction
B. Personal Jurisdiction
C. Subject Matter Jurisdiction
XI. RELIEF REQUESTED
1) This arbitration involves the patent disregard of fairness and the general rule of law in the Republic of Nicaragua ("Nicaragua"). Nicaragua laid waste to economic justice, social justice, and environmental justice concerning the investment in Nicaragua by Riverside Coffee, LLC ("Riverside" or "Investor"). In so doing, Nicaragua engaged in uncompensated expropriations and breaches of fair and equitable treatment, full protection and security, national treatment, and MFN treatment.
2) The egregious facts of the invasions and taking of Hacienda Santa Fé are described in depth below. This CAFTA claim concerns the unlawful seizure and destruction of an avocado plantation in Nicaragua owned by Riverside, the American controlling shareholder of a Nicaraguan corporation, Inversiones Agropecuarias, S.A. ("Inagrosa"),1 which owned and operated Hacienda Santa Fé.
3) Nicaragua has failed to meet the following obligations owed to the Investor and its Investment under the Treaty:
a) To compensate Riverside for the expropriation of its property.
b) To provide the Investment with treatment in accordance with international law, including fair and equitable treatment and full protection and security.
c) Because of the operation of the Most Favored Nation Treatment Clause, to not provide more favorable treatment offered to Russian Investors and their investments in Nicaragua than that offered to U.S. Investors and their investments; and
d) To provide treatment as favorable to American investors as that provided by Nicaragua to nationals of any third state.
4) The specific breaches of the Dominican Republic and Central American Free Trade Agreement ("CAFTA" or the "Treaty") by Nicaragua include measures more fully described below. All arose from the internationally wrongful acts Nicaragua took concerning the seizure of the Hacienda Santa Fé commencing on June 16, 2018. These measures resulted in the following Treaty violations:
a) Most Favored Nation (MFN) Treatment - Nicaragua offered treatment to investors of third states under another bilateral investment treaty that was more favorable than the treatment provided to the United States under the Treaty. To the extent that this treatment to nationals of Third-Party states is better, there is a violation of the MFN Treatment obligation.
b) Expropriation- Nicaragua failed to meet the CAFTA requirements upon the expropriation of property:
a. Nicaragua failed to pay fair market value compensation at the time of the taking to the Investor for the land taken.
b. Nicaragua did not expropriate the lands for a public purpose. Instead, Nicaragua failed to pay fair market value to the Investor upon the expropriation of their land; and
c. Nicaragua failed to follow the requirements of due process and the general principles of CAFTA Article 10.5, such as fair and equitable treatment and full protection and security concerning the expropriation.
5) International law standards of treatment - Nicaragua engaged in a breach of fair and equitable treatment and full protection and security as follows:
a) Nicaragua failed to afford Riverside's Investment with fair and equitable treatment and full protection and security regarding the seizure of Hacienda Santa Fé. Such actions were inconsistent with international standards of treatment on the interference by the State with property, a failure of due process, and adherence to the rule of law.
6) Riverside's losses arising from these breaches are fully set out in the Expert Valuation Statement of Vimal Kotecha (CES-01) described below.
7) The evidence produced in this arbitration demonstrates that:
a) Members of Nicaragua's government (its police, its voluntary police, its elected officials, and others) unlawfully seized Hacienda Santa Fé starting on June 16, 2018. Such actions create state responsibility upon Nicaragua for the unlawful seizure and destruction of the business at Hacienda Santa Fé.
b) Nicaragua admitted that it currently has the expropriated property but refuses to return it unconditionally.2 Nicaragua has not paid any compensation to Riverside for the taking of Hacienda Santa Fé
c) Nicaragua's police failed to protect Inagrosa, the lawful landowners, and the police actively assisted the wrongdoers4 in gross violation of fair and equitable treatment and full protection and security.
d) Nicaragua also failed to protect against significant environmental harm to the protected rare forest preserve located at Hacienda Santa Fé and destroyed by the paramilitaries.
e) Better treatment was available to local Nicaraguans than was provided to Riverside and its Investment in violation of national treatment.
f) Nicaragua provided better treatment to Russian investors through the Nicaragua-Russia bilateral investment treaty ("Russian Treaty") than provided to Americans under the CAFTA. As a result, as detailed below, a number of provisions of the CAFTA are replaced in this claim by more favorable provisions in the Russian Treaty.
8) The issues in this claim expose systemic practices by the government of Nicaragua to undermine fairness and the rule of law, causing egregious harm to the respect for fundamental human rights. The measures are troubling as they involve using the police not to serve and protect but to steal and harass. In this case, the Tribunal will see evidence of state-sponsored invasions, looting, and death threats. These astonishing actions undermine the rule of law and are antithetical to its very concept.
9) These measures involve the environmental degradation of the rare forest reserve5 and occurred amongst the deplorable erosion of the full respect for human rights and the imposition of an obstacle to the conditions for free and fair elections. These measures, which are internationally wrongful and unacceptable under international law, give context to the treaty breaches in this claim.
10) In summary, Inagrosa management informed the National Police of suspicious activity around its lands in the days before the first invasion, which occurred on June 16, 2018, by unlawful invaders led by armed paramilitaries
11) The term "paramilitary" refers to organized invaders who acted at the behest of Nicaragua to carry out the government's political objectives.7 The paramilitaries are a part of the Nicaraguan State.8 The paramilitaries are rewarded from the proceeds of their unlawful pillaging.9 Paramilitaries are armed units led by a commander ("Comandante"). The Comandante leads the paramilitary unit based on instructions from the Nicaraguan government, including the elected government leaders and the police.
12) The National Chief of Police has confirmed that the paramilitaries are deputized national police officers.10 The action of the police, including the voluntary police, are central to this claim. Not only did the National Police not provide police protection to the lawful landowner,11 but the National Police actively assisted the armed paramilitaries in taking Hacienda Santa Fé, going so far as to disarm the Hacienda Santa Fé's security guards
13) Hacienda Santa Fé was looted, its crops, avocado orchards, and facilities destroyed, and its land was redistributed in smaller lots to others who farmed it.13 This was part of an ongoing systemic practice in Nicaragua where the parapolice and paramilitary forces invasions are tolerated by the national police and generally sanctioned by regional police commanders to deprive lawful landowners of their property
14) Witnesses to the invasion describe how the paramilitaries intended to form a cooperative called El Pavón to facilitate land redistribution by transferring the Hacienda Santa Fe's legal title.15 This process of land redistribution was done at gunpoint. There was no legal process applied. No court hearing or application of Nicaraguan domestic law. No lawful process known to Nicaraguan law was followed. The Investor lost its Investment through the use of force applied by those working for the State. The rule of law was replaced with the "rule of the jungle."
15) The measures taken by Nicaragua constituted a flagrant abuse of process, a failure of good faith, a total abnegation of the rule of law and human rights, and a breach of the obligation of full protection and security.
16) The measures raised in this claim are shocking. The paramilitaries engaged in death threats against Inagrosa's management.16 When they could not find the management, they sent out death squads to locate and, if found, put to death, Inagrosa's senior management.17 Thankfully none of the management was killed, but they underwent deeply traumatic experiences.
17) This arbitration claim involves the taking and destruction of Riverside's Investment under the CAFTA.18 The extraordinary circumstances surrounding the taking and destruction of the Hacienda Santa Fé, located in Jinotega, Nicaragua, are grossly inconsistent with the Treaty.
18) The deprivation to the Investor, Riverside, and its Investment, Inagrosa, caused catastrophic losses due to the outright seizure of Riverside's Nicaraguan business at Hacienda Santa Fé. There were also profoundly destructive impacts on a private wildlife preserve under the environmental stewardship of Inagrosa's management that contained a sustainable forest that included valuable and rare hardwood species that would have been sustainably harvested.19 The massive deforestation put many environmental species at risk and destroyed Inagrosa's investment in the forest
19) CAFTA investment protections were created to protect foreign investors from these forms of internationally unlawful activity. The CAFTA prohibits such grossly improper practices from disrupting commercial certainty and cross- border investment. The measures impugned in this claim are contrary to the core of international law, which is reflected in the obligations in CAFTA Chapter Ten.
XI. RELIEF REQUESTED
946) For the reasons set out in this Memorial, without limitation and reserving Riverside's right to supplement this request for relief in accordance with Rule 20 of the ICSID Arbitration Rules, Riverside respectfully requests that the Tribunal grant the following relief for its claims under CAFTA Article 10.16(1)
a) A Declaration that Nicaragua has acted inconsistent with its Treaty obligations under CAFTA Articles 10.1, 10.2, 10.3, and 10.5;
b) An award for Economic Loss Damages to the Investor for its claims under under Article 10.16 (1)(a) in the amount not less than US$ 644,098,011 plus interest from the date of the award at a rate set by the Tribunal;
c) An award for Moral Damages to the Investor for its claims under Article 10.16 (1)(a) in the amount of US$ 45 million plus interest from June 16, 2018 at a rate set by the Tribunal.
d) Alternatively, or in combination, an award for Economic Loss Damages to the Investment for its claims under Article 10.16(1)(b) in the amount not less than US$ 644,098,011 plus interest from the date of the award at a rate set by the Tribunal;
e) An award for Moral Damages to the Investment for its claims under under Article 10.16(1)(b) in the amount of US$ 45 million plus interest from June 16, 2018 at a rate set by the Tribunal; and
f) An award in favor of the Investor on behalf of itself and / or on behalf of its Investment for their costs, disbursements, and expenses incurred in the arbitration for legal representation and assistance, plus interest, and for the costs of the Tribunal.
ALL OF WHICH IS RESPECTFULLY SUBMITTED
Prof. Barry Appleton
Appleton & Associates International Lawyers LP