MIGA's Investment Dispute Mediation Services in Ethiopia

MIGA's Investment Dispute Mediation Services in Ethiopia

WASHINGTON, DC, February 11, 2003—The Multilateral Investment Guarantee Agency (MIGA), a member of the World Bank Group, has been negotiating with investors and the government of Ethiopia to help resolve investment claims resulting from expropriatory actions taken under the Mengistu government 27 years ago. These actions involved the expropriation of all assets owned by foreign investors. At the government's request, MIGA and Ethiopia co-signed a Memorandum of Understanding in October 2000 designating the agency the official mediator for resolution of the expropriation claims.

In accordance with MIGA's mandate, the agency tries to find amicable solutions to foreign investment disputes and helps governments apply appropriate principles of international law. Once a government invites MIGA's assistance, the agency acts as a neutral third-party facilitator that brings governments and foreign investors together to settle disputes amicably, without the need for formal arbitration or litigation. Mediation is often much less expensive and time-consuming than arbitration, and does not hand down a decision, but provides recommendations.

As a development institution, MIGA's goal is to help Ethiopia resolve these claims and honor its international obligations, which will help improve the country's image and allow it to attract the funding and private investment needed for economic growth and poverty reduction. Regardless of who the claimant is, MIGA must be satisfied, before taking on a case, that the dispute is of sufficient significance to jeopardize a country's ability to attract investment. In fact, improving countries' investment climates has been identified as a cornerstone to reaching the internationally agreed Millennium Development Goals by 2015.

There are currently some 42 claims being reviewed by MIGA. A few cases have been resolved. The fact that the claimants' assets were expropriated is not under dispute. What is at issue is the amount of compensation due. MIGA is in no way insisting or advocating that the government provide the full amount of compensation requested by the claimants. Given the dire economic situation and looming threat of severe famine facing the people of Ethiopia, MIGA is highly sensitive to the need for fair and reasonable solutions. The agency is therefore working hard to lower expectations and negotiate reasonable and fair payout agreements, while ensuring that Ethiopia abides by its legal obligations under international law.

The World Bank currently has a portfolio of 20 projects worth more than $1.9 billion in Ethiopia, all through its concessional lending window (IDA), supporting initiatives across a number of sectors. The Bank is in the process of preparing its next three-year program of assistance for Ethiopia to support Ethiopia's Poverty Reduction Strategy Program. For more on the World Bank Group's activities in Ethiopia, please visit the country website at www.worldbank.org/et, which also includes recent discussions on private sector development.

For information

Moina Varkie, mvarkie@worldbank.org, t. 202.473.6170