brought under the dominican republic - central america - ita

holding company. This is, as the name suggests, strictly a company to hold assets.
137
4.71. Mr. Shrake also explained that the principal activities of the group of companies in
Nevada, USA were not the Claimant‟s but those of Pacific Rim Exploration Inc. as
regards „mine-finding‟ and „wealth creation‟, with which company he identified
himself (i.e. not the Claimant): “We are the intellectual property of the company”
and “it contributed everything to El Salvador.” 138 This explanation significantly excluded
the Claimant from the scope of such activities (not being involved with such
intellectual property, in contrast to Pacific Rim Exploration Inc).
4.72. This Tribunal does not here decide that a traditional holding company could never
meet the first condition in CAFTA Article 10.12.2 as to “substantial business activities”.
Generally, such holding companies are passive, owing all or substantially all
of the shares in one or more subsidiary companies which will employ personnel and
produce goods or services to third parties. The commercial purpose of a holding
company is to own shares in its group of companies, with attendant benefits as to
control, taxation and risk-management for the holding company‟s group of companies.
It will usually have a board of directors, board minutes, a continuous physical
presence and a bank account.
4.73. That is clearly not the case here with the Claimant, compounded by its change of
nationality. In the Tribunal‟s view, the Claimant‟s case fails the simple factual test
of distinguishing between its geographical activities before and after the change of
nationality in December 2007. It is not possible from the evidence of Ms McLeod-
Selzer and Mr Shrake (including contemporary documentary exhibits) for the Tribunal
to identify any material difference between the Claimant‟s activities as a company
established in the Cayman Islands and its later activities as a company established
in the USA: the location (or non-location) of the Claimant‟s activities remained
essentially the same notwithstanding the change in nationality; and such activities
were equally insubstantial.
137
138
Hearing D2.492-493xx.
Hearing D2.511-512xx.
Part 4 - Page 21