{"id":16506,"date":"2025-09-04T14:48:02","date_gmt":"2025-09-04T12:48:02","guid":{"rendered":"https:\/\/www.iisd.org\/itn\/?p=16506"},"modified":"2026-01-19T16:07:01","modified_gmt":"2026-01-19T15:07:01","slug":"unravelling-title-legitimacy-and-due-process-in-post-restitution-arbitration-asael-halevi-v-czech-republic-meher-tandon","status":"publish","type":"post","link":"https:\/\/www.iisd.org\/itn\/2025\/09\/04\/unravelling-title-legitimacy-and-due-process-in-post-restitution-arbitration-asael-halevi-v-czech-republic-meher-tandon\/","title":{"rendered":"Unravelling title, legitimacy, and due process in post-restitution arbitration"},"content":{"rendered":"

Asael Halevi v. Czech Republic,\u00a0<\/em>UNCITRAL<\/span> Arbitration under the Israel\u2013Czech Republic BIT<\/span>, Final Award, December 12, 2024<\/strong><\/h2>\n

Overview<\/strong><\/h3>\n

In Asael Halevi v. Czech Republic<\/a><\/em>, a UNCITRAL tribunal seated in London dismissed claims arising under the Israel\u2013Czech Republic Bilateral Investment Treaty (1997). The case centred on the fallout of post-communist restitution in the Czech Republic and its interaction with international investment protections. Halevi, an Israeli national, alleged that court decisions returning land to a Catholic religious order\u2014land his company sought to develop\u2014amounted to judicial expropriation, a breach of FET<\/span>, and a denial of justice. The tribunal found otherwise.<\/p>\n

The tribunal reaffirmed the principle that a valid legal interest under domestic law is a necessary precondition for protection under international investment law. It also underscores the high threshold required to establish judicial expropriation or a denial of justice, especially in contexts shaped by transitional legal regimes.<\/p>\n

Background<\/strong><\/h3>\n

Halevi held a 22% stake in \u010e\u00e1blick\u00e9 rezidence s.r.o., a Czech company formed to develop four land parcels in Prague. These parcels, nationalized by the Czechoslovak state in 1948, were originally owned by the Knights of the Cross of the Red Star. Between 1998 and 2010, the land passed through various private hands before being acquired by \u010e\u00e1blick\u00e9 rezidence from individuals who had received it as \u201creplacement land\u201d under the 1991 Act on Land.<\/p>\n

In 2012, the Czech legislature enacted the Church Restitution Act, reviving the possibility for religious orders to reclaim previously nationalized property. By 2015, the Knights of the Cross successfully petitioned Czech courts to annul the company\u2019s title to the land, and in 2019, the Prague Municipal Court ruled in their favour (\u201cJanuary 2019 Judgment\u201d). Halevi\u2019s claim was that this judicial process had retroactively expropriated his investment and failed to observe minimum standards of due process.<\/p>\n

Halevi advanced three principal arguments: (a) the 2019 court ruling constituted a form of judicial expropriation, executed without compensation; (b) the Czech Republic had violated its obligation to accord fair and equitable treatment, undermining his legitimate expectations; and (c) the restitution litigation process involved a denial of justice, reflecting bias and procedural unfairness under the Church Restitution Act.<\/p>\n

No investment, no expropriation<\/strong><\/h3>\n

The tribunal first addressed whether Halevi held a protected investment. It found that \u010e\u00e1blick\u00e9 rezidence had never acquired valid title to the land because the 2010 transfer violated Section 29 of the Act on Land, which prohibited transfers of Church-owned land absent a specific legislative exemption.<\/p>\n

Rejecting arguments based on good faith acquisition or usucaption, the tribunal concluded that the company\u2019s title was void ab initio. Halevi\u2019s claim, being derivative of a non-existent ownership right, failed at the jurisdictional threshold: there was no asset capable of being expropriated under international law.<\/p>\n

Judicial expropriation and denial of justice<\/strong><\/h3>\n

Halevi sought to elevate his claim into the realm of judicial expropriation, asserting that the January 2019 judgment represented a wrongful act of adjudicative taking. Citing various arbitral precedents, he argued that the courts had acted as an instrumentality of the state to deprive him of property under the restitution framework.<\/p>\n

However, the tribunal held that the Czech courts did not engage in conduct rising to the level of denial of justice or manifest procedural illegality. Relying on jurisprudence such as Helnan International Hotels A\/S v. Arab Republic of Egypt<\/a><\/em>, ICSID<\/span> Case No. ARB\/05\/19, Award of 3 July 2008 and Krederi Ltd. v. Ukraine<\/a><\/em>, ICSID Case No. ARB\/14\/17, Award of 2 July 2018, it reiterated that for a court\u2019s decision to amount to a judicial expropriation, there must be evidence of gross procedural misconduct or fundamental legal impropriety, not merely incorrect application of domestic law.<\/p>\n

The tribunal emphasized that it was not empowered to act as a court of appeal over national decisions and declined to revisit factual or legal determinations made by the domestic courts. Moreover, the tribunal independently reached the same legal conclusion as the domestic courts regarding the invalidity of the land transfers.<\/p>\n

Fair and equitable treatment<\/strong><\/h3>\n

Halevi argued that the Czech Republic violated the FET standard by frustrating his legitimate expectations, failing to maintain legal stability, acting arbitrarily and discriminatorily, and denying due process. These arguments stemmed from the way the restitution proceedings unfolded and the final result of the domestic litigation.<\/p>\n

The tribunal rejected these contentions. It held that Halevi\u2019s expectations could not be deemed legitimate, as they were premised on a highly contested title acquired through a company whose legal claim to the land was void from the outset. It noted that the land’s restitution history was not only public but widely known, and that an investor engaging in real estate development in the Czech Republic post-1989 had to anticipate legal uncertainty. Halevi was a sophisticated party who assumed the risk of investing in land with contested provenance.<\/p>\n

Moreover, the Church Restitution Act, though enacted in 2012, applied only to claims already recognized under the 1991 Act on Land and did not create new substantive rights. Its procedural mechanisms were not retroactive in the legal sense alleged.<\/p>\n

Due process and denial of justice<\/strong><\/h3>\n

Regarding due process, the tribunal examined Halevi\u2019s allegations that the burden of proof had been unfairly shifted and that church entities were afforded procedural advantages under the Church Restitution Act. The tribunal acknowledged these claims but did not find them sufficient to rise to the level of procedural denial under international law. It found that Halevi had full access to an independent judiciary, was represented by counsel, and had availed himself of multiple levels of review. The litigation was protracted and adversarial, but not deficient in fairness by international standards. It ultimately found the Czech Republic\u2019s legal process to be reasonably transparent, rule-based, and consistent with standards of fairness.<\/p>\n

Similarly, the tribunal dismissed the claim for breach of full protection and security. The standard was not engaged, as Halevi\u2019s grievances concerned legal\u2014not physical\u2014interference.<\/p>\n

Conclusion<\/strong><\/h3>\n

This award emphasizes the principle that investment tribunals will not second-guess domestic property determinations absent egregious wrongdoing. A foreign investor claiming expropriation must first demonstrate a qualifying legal interest under local law. Where none exists, allegations of judicial expropriation or denial of justice cannot stand. The case also recalibrates the contours of judicial expropriation and denial of justice. The tribunal declined to act as an appellate review body over national courts. It demanded compelling evidence of procedural misconduct, discrimination, or manifest unfairness, and found none.<\/p>\n

Author<\/em><\/h3>\n

Meher Tandon is an India-qualified lawyer, specializing in international dispute settlement.<\/p>\n

Note<\/em><\/h3>\n

The arbitral tribunal was presided over by Lucy Reed and comprised Klaus Reichert SC (appointed by the claimant) and Sam Wordsworth KC (appointed by the respondent).<\/p>\n