Erlanger v new sombrero phosphate co
A classic case!
Erlanger v. New Sombrero Phosphate Co. (1878) is a landmark case in the history of international arbitration and the development of international law. Here's a brief summary:
Facts:
The New Sombrero Phosphate Company, a British company, had a concession to mine phosphate deposits on the island of Sombrero, which was then a British colony in the West Indies. The company was unable to extract the phosphate due to the lack of a suitable harbor. The Erlanger family, a French banking dynasty, agreed to finance the construction of a harbor in exchange for a share of the phosphate deposits. The agreement was made in 1869.
Dispute:
However, the construction of the harbor was delayed, and the Erlangers claimed that the New Sombrero Phosphate Company was not fulfilling its obligations under the agreement. The Erlangers sought arbitration to resolve the dispute, which was agreed to by both parties.
Arbitration:
The arbitration was conducted by a tribunal consisting of three arbitrators: one appointed by each party and a third, neutral arbitrator. The tribunal held hearings in Paris and issued a decision in 1877.
Decision:
The tribunal ruled in favor of the Erlangers, finding that the New Sombrero Phosphate Company had breached its obligations under the agreement. The tribunal ordered the company to pay the Erlangers a significant sum of money, which was equivalent to approximately $1.5 million in today's currency.
Significance:
The Erlanger v. New Sombrero Phosphate Co. case is significant for several reasons:
- International arbitration: The case established the principle of international arbitration as a means of resolving disputes between foreign parties. It demonstrated that arbitration could be an effective and efficient way to resolve disputes without resorting to litigation in national courts.
- International law: The case contributed to the development of international law, particularly in the areas of contract law and arbitration. It helped to establish the principles of international arbitration, including the concept of "arbitral immunity" and the importance of respecting the tribunal's decision.
- Investment protection: The case is also notable for its implications for investment protection. The tribunal's decision recognized the Erlangers' rights as investors and protected their interests, which has since become a cornerstone of international investment law.
Overall, the Erlanger v. New Sombrero Phosphate Co. case remains an important milestone in the history of international arbitration and investment protection.