The US-Dominican Republic–Central America Free Trade Agreement (CAFTA for short) was signed in 2004. It encompasses the United States and the Central American countries of Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and the Dominican Republic.
The investor-state dispute settlement (ISDS) mechanism specified in CAFTA has provided US companies privileged means to challenge national laws and claim millions of US dollars in compensation in Central America. The US has only been challenged once (case still pending).
As of end of June 2015, CAFTA was invoked in about 1% of all ICSID cases.
The most well-known cases include:
• TCW (US) vs. The Dominican Republic: case settled in 2009 for US$26.5 million to the investor, an investment management corporation.
• Railroad Development Corporation (US) vs. Guatemala: US$18.6 million awarded in 2012 to the investor in a dispute over a railroad contract.
• Pac Rim Cayman LLC (Canada, U.S.-based subsidiary) vs. El Salvador: in 2008, El Salvador denied a mining permit to Pac Rim due to environmental concerns. In 2012, a CAFTA tribunal allowed the mining corporation to pursue its claims at the World Bank’s International Centre for Settlement of Investment Disputes (ICSID) under domestic investment law. Case is still pending.