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The Republic of Nicaragua has secured a significant legal victory as a California federal judge conditionally granted enforcement of a $1.5 million costs award in favor of the country. The ruling comes after a long-running investor–state arbitration in which U.S. investors unsuccessfully sought $198 million in damages against Nicaragua before the International Centre for Settlement of Investment Disputes (ICSID).

U.S. District Judge Maxine M. Chesney issued the order on Friday, recognizing Nicaragua’s right to recover costs from investors including Hills Exploration Corp., the Barish Family Trust, the Bochnowski Family Trust, and the Lopez-Goyne Family Trust. The enforcement was granted on the condition that Nicaragua secures a default judgment against two served but non-appearing respondents and voluntarily dismisses claims against 10 respondents who were not served.

The underlying arbitration, launched in 2017, centered on measures taken by the Nicaraguan government regarding Industria Oklahoma Nicaragua SA, a local oil and gas company. In March 2023, a three-member ICSID tribunal rejected the investors’ claims under the Dominican Republic-Central America Free Trade Agreement (CAFTA-DR) and ordered the claimants to compensate Nicaragua with $1.5 million in legal costs and expenses.

Nicaragua argued before the U.S. court that the ICSID award must be enforced under international law, dismissing investor allegations of corruption and due process violations. Judge Chesney agreed that U.S. courts have no authority to revisit procedural findings of the ICSID tribunal.

“This ruling affirms Nicaragua’s rights under the ICSID Convention and underscores the importance of respecting international arbitral awards,” said Marco Molina of Baker & Hostetler LLP, counsel for Nicaragua. “Because the underlying dispute arises from investor–state arbitration, the decision carries important implications for international law and the enforcement of ICSID awards.”

The case is The Republic of Nicaragua v. The Lopez-Goyne Family et al., Case No. 3:24-cv-03104, in the U.S. District Court for the Northern District of California. The ICSID case is The Lopez-Goyne Family Trust and Others v. The Republic of Nicaragua, Case No. ARB/17/44.