brought under the dominican republic - central america - ita

4.17. (iii) Timeliness: The Respondent contends that it denied timeously benefits under
CAFTA on 3 August 2010 as regards the Claimant; that its notification to the USA
on 1 March 2010 was also made timeously; that its invocation of CAFTA‟s denial of
benefits provision was not required before the commencement of these ICSID arbitration
proceedings by the Claimant on 30 April 2009 (with its Notice of Arbitration);
and that in any event such invocation could not have been made before 13 December
2007 when the Claimant became an enterprise of the USA (as a CAFTA
Party).
4.18. First, the Respondent submits that the plain language of CAFTA sets forth the requirements
for the invocation of denial of benefits; and that, notably, nowhere does
CAFTA impose any time-limit for such an invocation by a CAFTA Party by notice
to a claimant. The Respondent also cites Ms Kinnear‟s NAFTA Guide and Thorn &
Doucleff‟s “Disregarding the Corporate Veil and Denial of Benefits Clauses: Testing
Treaty Language and the Concept of „Investor‟” (2010) to show that, in practice, the
question whether a State has the right to deny benefits to an investor is most unlikely
to arise before a dispute with that investor: “Before this, states do not necessarily
have either a reason or the opportunity to evaluate the nationality of the investors involved
in potentially countless foreign investments within their territory.”
4.19. Second, the Respondent submits that a CAFTA Party‟s invocation of denial of benefits
remains appropriate after an ICSID arbitration has commenced; and that it does
not amount to the unilateral withdrawal of consent prohibited by Article 25(1) of the
ICSID Convention. According to the Respondent, the CAFTA Party is not there
withdrawing consent because the general consent expressed in CAFTA Article 10.17
to “the submission of a claim to arbitration under this Section in accordance with
this Agreement,” remains intact; but there was and remains no unconditional consent
to arbitrate disputes with an enterprise falling within CAFTA Article 10.12.2. The
Respondent submits that an investor of a non-CAFTA Party cannot enjoy the benefits
of CAFTA; and that CAFTA‟s provision on denial of benefits simply protects
CAFTA Parties and their nationals from “free-riding” non-CAFTA Party investors
improperly invoking arbitration and other benefits under CAFTA.
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