Andraous vs the Netherlands

Businessmen diverted hundreds of millions of dollars from a pension fund active on Curaçao and neighbouring Caribbean islands. Courts ruled the money should be paid back. Yet, one of the businessmen (who was ordered by court to pay back money) is now suing the Netherlands in an investment arbitration tribunal. He argues that the depletion of the pension fund was actually caused by actions of Curaçao’s central bank – and so ultimately by the Netherlands, within which the island state is a constituent country. Will Dutch taxpayers now be forced to pay for the damage he caused to the pension fund?

Everyone on Curaçao and neighbouring islands like Sint Maarten knows about the debacle involving insurance company Ennia. Local media have called it “the theft of the century”.[1]

Ennia is the largest insurer in the Dutch Caribbean, offering everything from car insurance to pension plans. In 2006, the company was bought by US-Iranian oil billionaire Hushang Ansary. In the years that followed, deploying shell companies and a series of complex transactions – including for dividends, bonuses, payments to fake staff, the purchase of other companies, and the expensive use of private jets – he and his team drained Ennia of several hundred million dollars. This brought the firm close to collapse, threatening the pensions of around 30,000 people.[2]

In 2018, Curaçao’s Central Bank stepped in, took over Ennia’s administration and started to search for the money that had been siphoned away. By 2023, two Curaçao courts had found Ansary and others liable for improper use of Ennia money, ordering them to pay compensation.[4] But so far not a single guilder has been paid back.

Pension fund bailout at taxpayers’ expense

Instead, a very significant amount of public money has been committed to rescue Ennia and secure people’s pensions. For the next 30 years, Curaçao will pump 30 million guilders (around $16.7 million or 12 per cent of its 2025 education budget) into the company every year. Sint Maarten will pay an additional 2.3 million guilders (around $1.3 million or 6 per cent of its 2025 social security budget) per year.[5]

This use of taxpayer money to bailout Ennia has been heavily criticised. A third of the island’s population live below the poverty line,[6] and there is a dire need for investment in healthcare and education. Curaçao politicians have pointed out that “the growing debt makes that more difficult.”[7] Neither current nor future generations on these islands should have to pay for the mismanagement at Ennia.[8]

ISDS counter-attack from businessman ordered by Curaçao courts to pay back money

But the Ennia businessmen who were found by the courts of Curaçao to have acted unlawfully are determined to fight the rulings against them by all possible means. One of them is Abdallah Andraous, Ennia’s former director. In November 2021, he was found by a court of first instance in a civil case filed by Ennia to have unlawfully extracted over $132 million from the company.[9] In September 2023, the Curaçao Court of Appeal upheld the verdict.[10] The final decision on the damages Andraous will have to pay to Ennia is expected in late 2025.

Yet, in February 2023, Andraous went on the legal counterattack. He sued the Netherlands in an investor-state dispute settlement (ISDS) tribunal, claiming “at least” $132,850,633.44 in compensation –the same amount he has been ordered to repay. Andraous, who held Lebanese-Dutch citizenship when he filed the claim, is suing via the 2002 Lebanon-Netherlands investment treaty. He argues that he was not just a director, but also a shareholder – and therefore an investor – in Ennia. He complains that his investment was “destroyed” by Curaçao’s Central Bank, which eroded the value of the company until it was “a worthless shell”. His full argument is set out in the ‘Notice of Arbitration’ filed on his behalf, dated 7 February 2023, which can be accessed using the link in the footnote.[11]

Protection for a non-existent investment?

Several eyebrow-raising details are a feature of this arbitration. Firstly, Andraous hasn’t lived in Lebanon for forty years. In its defence against the complaint, the Dutch government claims that Andraous lived in Sint Maarten during the mismanagement at Ennia, and always presented himself as a Dutch citizen (while also holding Lebanese nationality).[13]

There are also serious doubts about Andraous’ investment. He claims to own one per cent of shares in Parman International – the company which owns Ennia. Yet, during proceedings the Dutch government has presented evidence that he sold these shares long ago, arguing that “Andraous does not have a protected ʻinvestment’ under the BIT” (bilateral investment treaty).[14]

Ultimately, three private lawyers – the arbitrators – will interpret the BIT’s vague terms and accept the case or not. Unlike judges, these for-profit arbitrators do not have a flat salary, but are paid (lucratively) per case. In a one-sided system where only investors can bring claims, this creates a strong financial incentive to side with them – because investor-friendly rulings pave the way for more ISDS claims and more income in the future.

ISDS helps executives to evade responsibility

In Curaçao and neighbouring islands, people are apprehensive about the arbitration, watching carefully as it proceeds. “Why this treaty between the Netherlands and Lebanon is relevant remains unclear,” a journalist wrote when the ISDS claim became known. He argued that, while Andraous and the other persons who were found to be liable in the civil case before the courts of Curacao have a right to defend themselves, “there comes a time when you have to take responsibility for your actions.”[16] Yet Andraous appears to have started the ISDS case to evade his responsibility.

Will the ISDS tribunal enable this, by ruling in his favour? “If it does, the most immediate impact would be that Mr Andraous could then force Dutch taxpayers to pay for the damage he caused to Ennia,” warns Timo Zandstra, legal researcher at the European University Institute.[17] This wouldn’t be the first time someone who was ordered by a court to pay back money used arbitration proceedings to avoid this.