United States District Court, District of Columbia
BRETT BERKOWITZ, TREVOR BERKOWITZ, and AARON BERKOWITZ, Petitioners,
REPUBLIC OF COSTA RICA, Respondent.
MEMORANDUM OPINION JANUARY 20, 2018 [DKT. NOS. 1, 21,
RICHARD J. LEON UNITED STATES DISTRICT JUDGE.
Brett Berkowitz and his sons, Trevor Berkowitz and Aaron
Berkowitz (collectively referred to as "the Berkowitz
claimants" or "petitioners"), seek vacatur or
annulment of an interim award that was issued during
international arbitration proceedings they filed against
respondent, the Republic of Costa Rica ("Costa
Rica" or "respondent"). In the underlying
arbitration ("the Arbitration"), petitioners
alleged that Costa Rica's decision to expropriate their
beachside properties-and thus deprive them of their
residential real estate property investments-violated the
Dominican Republic-Central America Free Trade Agreement
five-day hearing, the Arbitration Tribunal ("the
Tribunal") issued an interim award ("the Interim
Award" or "the Award") on jurisdiction,
finding that it: (1) lacked jurisdiction to hear claims with
regard to one of petitioners' properties; (2) had
jurisdiction to hear claims with respect to two of
petitioners' properties; (3) and needed more briefing on
whether it had jurisdiction to hear claims regarding
petitioners' two remaining properties. The Berkowitz
claimants then filed a Petition to Vacate the Interim Award
in this Court, pursuant to Section 10 of the Federal
Arbitration Act ("FAA"), 9 U.S.C. § 10, on the
ground that the Tribunal exceeded its authority in issuing
the Award. While their Petition was pending in this Court,
the Berkowitz claimants voluntarily withdrew their claims
before the Tribunal.
Berkowitz claimants' Petition is now fully briefed and
ripe for my review. Upon consideration of the parties'
submissions and the entire record herein, I find that the
Berkowitz claimants' Petition must be DENIED. This case
accordingly will be DISMISSED with prejudice.
delving into the dispute at issue in the Arbitration, I must
provide a brief background on the land disputes that formed
the basis of petitioners' claims against Costa Rica.
The Marine Park
early 1990s, the government of Costa Rica became increasingly
concerned that tourist development near the country's
beaches would seriously affect the nesting of leatherback
turtles in that area. See Pet. to Vacate Arbitration
Award Ex. K ("Interim Award") [Dkt. #1-11] ¶
33. To reduce the impact of tourism on the leatherback
turtles, Costa Rica decided to establish a marine park in
order to protect the turtles, as well as other species and
natural resources. Id. On July 9, 1991, the Ministry
of Natural Resources, Energy and Mines accordingly issued an
executive decree ("the 1991 Decree"), declaring the
government's intent to establish a park to be known as
Parque National Marino Las Baulas de Guanacaste ("the
Park"), which translates to National Leatherback Turtle
Marine Park of Guanacaste. Id. at ¶¶ 33,
60. The 1991 Decree stipulated the exact boundaries of the
park, and as relevant here, called for "a strip of land
of 75 meters from the public zone, " which consists of
the first 50 meters of land running inland from the mean high
tide line. Id. at ¶¶ 33, 34. This decree
essentially established a marine park that extended 125
meters inland from the high tide mark. Id. at ¶
years later, on July 10, 1995, the Costa Rican Congress
passed Law No. 7524 ("the Park Law"), which
authorized the state to acquire, either through direct
purchase or expropriation, any private properties or portions
thereof that are located within the boundaries of the Park.
See Id. at ¶ 36. Importantly, however, the Park
Law established the eastern boundary of the Park at 125
meters west of the mean high tide mark, rather than
125 meters east of the mean high tide mark, as
contemplated by the 1991 Decree. Id. at ¶¶
36-37. In essence, the Park law created an offshore marine
park. Id. The conflict between the 1991 Decree's
contemplated inland marine park and the Park Law's
offshore park generated uncertainty regarding the boundaries
of the Park. Id. at 37.
The Berkowitz Acquisitions
2003, Brett Berkowitz began to purchase land along the
Pacific coast of Costa Rica, hoping to build luxury homes on
that land in the future. See Pet. to Vacate
Arbitration Award, Ex. D. ("Notice of Arbitration")
[Dkt. #1-4] ¶ 43; Interim Award ¶ 60. Before
purchasing the land, Brett Berkowitz alleges that he met
personally with the Minister of the Environment and Energy,
Carlos Manuel Rodriquez Echandi ("Echandi"), and
received assurances that he would be permitted to develop
this real estate, even though large portions of it fell
within the boundary set by the 1991 Decree-but not within the
boundary set by the Park Law. Interim Award ¶ 60.
According to petitioners, Echandi stated "that the
Government did not intend to expropriate the land in
question, they did not have the funds for it, and the
Government and his Ministry did not intend to prevent
development of the private property bordering the public zone
. . . ." Id. Brett Berkowitz ultimately
acquired five of the lots at issue in the Arbitration: Lots
B3, B5, B6, and B8 ("the Berkowitz
Lots"). See Id. ¶ 254, Table 38.
2005, the Costa Rican government adopted Resolution No.
2238-2005-SETENA, which set the Park's eastern boundary
125 meters inland from the mean high tide mark.
Id. at ¶ 4l(i). Later that year, Costa Rica
began initiating local court proceedings to expropriate lots
that the government deemed to be located within the Park,
including some of the lots owned by petitioners. See
Pet. to Vacate Arbitration Award ("Pet'rs'
Pet.") [Diet. #1] ¶ 18.
Berkowitz claimants, and five other individuals and entities
whose properties were the subjects of these expropriation
proceedings, submitted their claims to the International
Centre for Settlement of Investment Disputes ("the
Tribunal"), an international arbitration tribunal,
alleging violations of Chapter Ten of CAFTA. See
Notice of Arbitration ¶¶ 1-3. In particular, they
alleged that Costa Rica failed "to provide prompt and
adequate compensation for its de facto and de
jure takings, " contrary to CAFTA Article 10.7.
Id. at ¶¶ 17, 14. They also contended that
Costa Rica failed to provide "access to the necessary
administrative and/or judicial means for the prompt review of
its de facto expropriation of certain segments of
the lots" in question, in violation of CAFTA Article
10.5's minimum standard of treatment requirement.
Rica objected to the Tribunal's jurisdiction on the
grounds that the claims fell outside of CAFTA's
three-year limitation period, and that the alleged breaches
occurred before CAFTA entered into force between Costa Rica
and the United States on January 1, 2009. See
Interim Award ¶ 109. On the merits, Costa Rica argued
that the petitioners "were, or should have been, aware
that their properties, or portions of them. were subject to
expropriation, as provided by the law creating the Park,
" and that, to the extent that any property has been
expropriated, "[it was] not. . . an uncompensated
expropriation." Id. at ¶ 8.