MIGA Helps Resolve Investment Disputes in Ethiopia

MIGA Helps Resolve Investment Disputes in Ethiopia

WASHINGTON, DC, April 21, 2005—The Multilateral Investment Guarantee Agency (MIGA), a private sector branch of the World Bank Group, announced today the resolution of two outstanding investment claims resulting from the expropriation of foreign-owned assets 30 years ago under Ethiopia's Mengistu government. The cases were resolved and compensation agreements reached during two days of discussions facilitated by MIGA between the major claimants and Ethiopia's Minister of Finance and Economic Development, Sufian Ahmed.

The first case involved investments in a tannery, shoe factory, and housing by French and Greek investors. The other claim concerned shares held by a group of Norwegian investors in the former Mosvold companies, which included woodworking, furniture, and retail stores.

MIGA's involvement in these cases stems from a request by the Ethiopian government in 2000 for the agency to act as a third-party facilitator to help resolve the disputes. The investments were not insured by MIGA. As a development institution, MIGA's goal is to help Ethiopia resolve the claims and honor its international obligations, which will help improve the country's investment climate and allow it to attract the private investment needed for economic growth and poverty reduction.

"Ethiopia's willingness to resolve these claims is a good demonstration of the importance it ascribes to addressing old grievances and removing a shadow over the country's ability to attract new foreign investment," said Luis Dodero, MIGA Vice President and General Counsel. "It is gratifying to see such significant progress on resolving these claims after a sustained effort on the part of the government and MIGA."

The Ethiopian government and foreign investors reached settlement on three other cases in the last four months, including the last German investor claim. Since MIGA commenced its mediation efforts, 48 claims have been reviewed and resolved and six offers remain outstanding to investors.

Finance Minister Sufian noted that although it has been a long and difficult process, he was pleased that the concerted effort by Ethiopia and MIGA had led to the direct resolution of two of the largest claims. "I was pleased and particularly gratified to receive expressions of appreciation from representatives of both investors for resolving these long-standing claims and to hear they are considering new investments in Ethiopia in the near future," said Minister Sufian. "The government of Ethiopia is grateful for the assistance that MIGA has rendered in resolving these claims and looks forward to the completion of its work in coming months."

Sufian expressed his government's hope that resolution of the claims will enhance Ethiopia's reputation as an investor-friendly country.

For information

Angela Gentile, agentile@worldbank.org,
t. 202.473.3509