A Spanish businessman has launched a US$100 million International Centre for Settlement of Investment Disputes (ICSID) claim against Costa Rica over measures that targeted his chicken meat-processing business on public health grounds. Spanish national Alejandro Díaz Gaspar filed his request for arbitration on 17 April under the Spain-Costa Rica bilateral investment treaty (BIT). It follows a notice of dispute in 2017. Díaz is represented by a team from Hogan Lovells LLP and WDA Legal in Miami. Both firms declined to comment on the case. The dispute relates to Ibérico, a food processing group Díaz founded in 2008 in Grecía in the Costa Rican province of Alajuela. Díaz says it was once one of the state’s leading suppliers of fresh chicken cuts, employing 900 people in the country at its height. Díaz alleges that the business was the victim of a discriminatory and arbitrary state campaign, which was initially driven by a property developer who wanted to build on a lot adjacent to Ibérico’s poultry processing plant in Grecía but felt the presence of the factory would harm the value of the properties. The developer is accused of using his “contacts and influence” with the Costa Rican government to begin a campaign against Ibérico, leading the Ministry of Health to conduct an inspection of the plant’s sewage treatment facilities in January 2016. According to Díaz, the ministry identified nine issues with the plant and ordered that they be corrected in “unusually short” time frames. Although Ibérico began complying with that order, the ministry soon afterwards issued a series of administrative orders that effectively suspended all activities at the plant, declaring that conditions at the plant constituted a national public health emergency. The businessman also alleges that Costa Rican ministers made defamatory statements about Ibérico in the national press, including allegations that its products were contaminated, with the purpose of generating public panic and discrediting the company. This alleged smear campaign caused Ibérico’s business and credit to dry up, he says. According to Díaz, Ibérico has now disappeared from the Costa Rican poultry market, with its market share mostly acquired by Costa Rican companies. The company has had to lay off its staff and is now being threatened with bankruptcy by former partners. Díaz says that the government’s measures amounted to a lack of fair and equitable treatment, while the speed at which the Ministry of Health made its orders and its failure to offer a right of response also violated his due process rights. The investor is seeking damages for lost sales, the job losses of its 950 employees and contracts Ibérico was unable to satisfy as a result of the government’s ban on its operations. In addition to his primary claim for US$100 million in damages, Díaz is also seeking US$1 million in moral damages. Díaz’s request for arbitration differs in certain respects from the 2017 notice of dispute, which was principally focused on Costa Rica’s imposition of restrictions on imports of chicken from Canada and the US. The restrictions are only mentioned in a footnote in the request for arbitration and no longer appear to be the main subject of the dispute. The 2017 notice also named Ibérico as a party to the dispute and invoked Costa Rica’s BITs with Spain and Venezuela, on the basis that Díaz was a dual Spanish-Venezuelan national. The request for arbitration describes Díaz as a Spanish national who also holds Venezuelan citizenship. Costa Rica is yet to instruct external counsel for the dispute. In September last year, the state defeated US$100 million claim by a group of US real estate investors, after a Dominican Republic-Central America free trade agreementtribunal found that measures taken by state authorities to protect wetlands and forests were not arbitrary or in breach of the trade agreement. In that case, Costa Rica was represented by Herbert Smith Freehills. Alejandro Diego Díaz Gaspar v Costa Rica Tribunal Not yet appointed Counsel to Alejandro Diego Díaz Gaspar Hogan Lovells LLP Partners Daniel González, Richard Lorenzo and María Eugenia Ramírez, with attorneys Juliana de Valdenebro and Yine Rodríguez Pérez in Miami WDA Legal Partners Hernando Diaz-Candia and Gilberto Guerrero-Rocca in Miami Counsel to Costa Rica Rodolfo Piza, Ministro de la Presidencia Julio Jurado Fernández, Procurador General de la República de Costa Rica Dyalá Jiménez Figueres, Ministra de Comercio Exterior This article was first published by Latin Lawyer's sister publication Global Arbitration Review on 23 April.
