{"id":1773,"date":"2012-01-12T02:26:20","date_gmt":"2012-01-12T08:26:20","guid":{"rendered":"http:\/\/itn.mattrock.ca\/?p=1773"},"modified":"2012-12-10T08:01:35","modified_gmt":"2012-12-10T14:01:35","slug":"awards-and-decisions-6","status":"publish","type":"post","link":"https:\/\/www.iisd.org\/itn\/2012\/01\/12\/awards-and-decisions-6\/","title":{"rendered":"Awards and Decisions"},"content":{"rendered":"

Arbitrator sharply critical of majority decision in Italian bondholder claim against Argentina
\n<\/span><\/strong>Abaclat and Others (Case formerly known as Giovanna a Beccara and Others) v. Argentine Republic, ICSID<\/span> Case No. ARB\/07\/5<\/span><\/span><\/span><\/em><\/p>\n

Damon Vis-Dunbar<\/span><\/p>\n

Professor Georges Abi-Saab has delivered a sharply worded dissent against a decision that granted jurisdiction to an ICSID case involving tens of thousands of Italians who claim to hold securities linked to Argentine sovereign bonds.<\/span><\/p>\n

In his 28 October 2011 opinion, Professor Abi-Saab challenges the decision by Professor Pierre Tercier and Professor Albert Jan van den Berg to accept Argentine government bonds as a protected investment under the Argentina-Italy BIT<\/span> and the ICSID Convention<\/span>. He also counters that an ICSID tribunal cannot accept jurisdiction over mass claims, in the absence of consent by the state party.<\/span><\/p>\n

While framing his dissent around these two main points of contention, Professor Saab finds fault with many aspects of the majority\u2019s decision.<\/span><\/p>\n

\u201cOne of the basic reasons of my unease with this excessively long award, is its style of turning around the main issues and drowning them into an ocean of minutia and elaborated details, rather than confronting them thoroughly,\u201d writes Professor Abi-Saab.<\/span><\/p>\n

Do sovereign bonds qualify as an \u2018investment?\u2019<\/span><\/em><\/p>\n

A key question for the tribunal in this case was whether sovereign bond instruments qualify as an investment under the ICSID Convention. The question is complicated by the fact that the ICSID Convention does not provide its own definition of investment, leading some tribunals, including the majority in this case, to rely on the definitions provided in BITs.<\/span><\/p>\n

Professor Abi-Saab makes the case for excluding sovereign bond instruments as a protected investment. In his opinion, the lack of an explicit definition for investment in the ICSID Convention does not mean the term is open to any definition that states provide for in their treaties. \u00a0<\/span><\/p>\n

Building on this foundation, Professor Abi-Saab considers the types of investments contemplated by the ICSID Convention, and concludes that it is investment that \u201ccontributes to the economic development of the host country, i.e. to the expansion of its productive capacity\u2026\u201d\u00a0\u00a0<\/span><\/p>\n

Professor Abi-Saab goes on to say that foreign direct investment is \u201c\u2019the ideal type\u2019 of investment for ICSID purposes.\u201d \u00a0While not stating that all portfolio-style financial investments are outside ICSID\u2019s protective rubric, he posits that neither are they necessarily covered.<\/span><\/p>\n

Particularly problematic in the case of the sovereign bond securities in this dispute, according to Professor Abi-Saab, is their lack of a territorial link to Argentina. Professor Abi-Saab points out that the securities were sold in financial markets outside of Argentina, denominated in foreign currencies, channeled through intermediaries in other countries, and subject to laws outside of Argentina. No longer based in Argentinean territory, Professor Abi-Saab says the securities cannot be considered protected investments under the Argentina-Italy BIT or the ICSID Convention. <\/span><\/p>\n

In conclusion, Professor Abi-Saab charges that the present case is \u201cthe first one to come before an ICSID tribunal in which the alleged investment is totally free-standing and unhinged, without any anchorage, however remote, into an underlying economic project, enterprise or activity in the territory of the host State. None of the logical short-cuts put forward by the majority award to palliate this absence, holds water.\u201d <\/span><\/p>\n

Collective mass claims<\/span><\/em><\/p>\n

In its defense, Argentina argued that mass claims are incompatible with the ICSID arbitration system. However, the majority played down the differences entailed by having thousands of claimants. \u201cAssuming that the tribunal has jurisdiction over the claims of several individual Claimants, it is difficult to conceive why and how the Tribunal could lose jurisdiction where the number of Claimants outgrows a certain threshold,\u201d wrote the majority.<\/span><\/p>\n

Professor Abi-Saab challenges that opinion. To his mind, there are fundamental differences between a bilateral action and a class action (or representative proceeding), and those differences call for special consent by the state party\u2019s to the treaty. \u00a0<\/span><\/p>\n

In support of his position, Professor Abi-Saab notes that representative proceedings had for the most part not been introduced in domestic or international jurisdictions at the time the ICSID Convention was drafted. He also points out that nearly all mass claims adjudicated at the international level have been based on special consent between the parties, and with rules of procedure designed to accommodate these proceedings.<\/span><\/p>\n

This, writes Professor Abi-Saab, is \u201cin stark contradiction with the findings of the majority award in the present case.\u201d<\/span><\/p>\n

Professor Abi-Saab also takes issue with the majority\u2019s opinion that the ICSID rules could accommodate mass claims without an \u201camendment\u201d to the rules, but could be achieved by an \u201cadaptation\u201d of the rules and \u201cfilling in gaps.\u201d<\/span><\/p>\n

This is an \u201cextraordinary\u201d and \u201cbaffling\u201d distinction, according to Professor Abi-Saab. He counters that \u201cno amount of sophistry and playing of words or newspeak can conceal the fact that the proposed adaptations \u2018diverge from the usual ICSID proceedings \u2026\u201d and therefore lies beyond the tribunal\u2019s jurisdiction.<\/span><\/p>\n

Domestic litigation required\u00a0<\/span><\/em><\/p>\n

Professor Abi-Saab also criticizes the majority\u2019s decision to allow the claimants to avoid a requirement in the Argentina-Italy BIT that the disputing parties first try to resolve complaints through consultation and the courts of the host country for 18 months, before resorting to arbitration.<\/span><\/p>\n

The majority had ruled that it would be \u201cunfair\u201d to deny the claim based on the failure to take the dispute in Argentine courts. This is in part because the majority felt Argentina \u201cwas not in a position to adequately address the present dispute within the framework of its domestic legal system.\u201d\u00a0<\/span><\/p>\n

In response, Professor Abi-Saab points to Article 26 of the ICSID Convention, which states that \u201cA contracting State may require the exhaustion of local administrative or judicial remedies as a condition of its consent to arbitration under this Convention.\u201d
\n<\/span>
\nAs an exhaustion of local remedies requirement is a \u201ccondition of its consent,\u201d it is also a limit to jurisdiction. As such, a failure to abide by the 18 month litigation period should have resulted in the dismissal of the case for lack of jurisdiction, maintains Professor Abi-Saab. <\/span><\/p>\n

\u00a0<\/span>Recent developments<\/span><\/em><\/p>\n

Professor Abi-Saab resigned from the tribunal shortly after issuing his dissent, meaning Argentina will need to appoint a new arbitrator. Prior to his dissent, however, the proceedings were suspended after Argentina moved to disqualify Tercier and van den Berg on the ground that they “may not be relied upon to exercise independent judgment.\u201d<\/span><\/p>\n

Notes\u00a0<\/span><\/em><\/p>\n

Professor Georges Abi-Saab\u2019s dissenting option is available at: http:\/\/italaw.com\/documents\/Abaclat_Dissenting_Opinion.pdf<\/span><\/a><\/span><\/p>\n

The majority\u2019s decision on jurisdiction and admissibility is available at: http:\/\/italaw.com\/documents\/AbaclatDecisiononJurisdiction.pdf<\/span><\/a><\/span><\/p>\n

A summary of the decision on jurisdiction and admissibility is available from ITN<\/span> at: https:\/\/www.IISD<\/span><\/span><\/span>.org\/itn\/2011\/10\/07\/awards-and-decisions-5\/<\/span><\/a><\/span><\/p>\n

Majority takes a broad reading of the MFN<\/span> provision in the Germany-Argentina BIT
\n<\/span><\/strong>Hochtief AG v. The Argentine Republic<\/em><\/span><\/p>\n

Damon Vis-Dunbar <\/span><\/p>\n

In a split decision, two members of an ICSID tribunal have allowed a German firm to by-pass litigation in Argentine courts and proceed directly to international arbitration.
\n<\/span>
\nThe 24 October 2011 decision on jurisdiction underscores long-standing divisions among arbitrators on the use of the Most-Favoured Nation (MFN) provision; in particular, whether it encompasses matters related to jurisdiction, including allowing claimants to access more liberal dispute-resolution provisions in BITs of third parties.<\/span><\/p>\n

The claimant, Hochtief, lodged its claim with ICSID in 2007, in connection with a dispute over the construction and operation of a toll road.<\/span><\/p>\n

The German-Argentina BIT states that disputes may be submitted to arbitration following an 18-month litigation period in national courts \u2013 or if both disputing parties agree to go straight to arbitration. <\/span><\/p>\n

The majority looked skeptically on the utility of the domestic litigation clause, noting that the parties would be free afterwards to pursue their claim in arbitration. <\/span><\/p>\n

\u201cTo oblige the parties to spend 18 months in litigation, where one or other (or both) of them might have decided in advance to reject any decision that might emerge from the courts, appears useless,\u201d wrote the majority.\u00a0\u00a0<\/span><\/p>\n

However, the two arbitrators side-stepped the question of whether, useless or not, the domestic litigation is a mandatory requirement by preceding to consider whether the claimant was entitled to the less-restrictive dispute resolution provision in the Argentina-Chile BIT, by way of the German-Argentina BIT\u2019s MFN clause.<\/span><\/p>\n

The MFN clause in the German-Argentina BIT\u2019s refers to \u201cactivities in connection with investments,\u201d which Vaughan Lowe (the tribunal\u2019s president) and Charles N. Brower (the claimant\u2019s appointee) concluded \u201cno doubt\u201d includes dispute settlement.<\/span><\/p>\n

That decision stands in contrast to a 2008 jurisdictional ruling in Wintershall v. Argentina<\/em>, where the tribunal faced the same issue with respect to the German-Argentina BIT. In the Wintershall<\/em> decision, the tribunal declined jurisdiction on the grounds that abiding by the conditions of the dispute resolution clause is \u201cpart and parcel\u201d of Argentina\u2019s consent to arbitration.<\/span><\/p>\n

The majority in the Hochtief<\/em> decision noted, however, that the claimant had to select the dispute resolution provision of the Argentina-Chile BIT is its entirety, rather than pick and choose among elements of the dispute settlement clauses in the different treaties. While having no bearing on the majority\u2019s decision to accept jurisdiction, the caveat links to a criticism recently levied by Professor Brigitte Stern in her dissenting opinion to the award in Impregilo S.p.A. v. Argentina. <\/em>Professor Stern warned against allowing claimants to <\/em>access parts of other treaties that favour their claim, while discarding less desirable aspects \u2013 which in effect creates \u2018super\u2019 treaties that are more favourable to investors than any one treaty alone.
\n<\/span>
\n Christopher Thomas\u2019 dissent
\n<\/span><\/em>
\nChristopher Thomas, Argentina\u2019s appointed arbitrator, challenged a number of the majority\u2019s opinions. While the majority viewed the 18-month domestic litigation requirement as \u201cpointless,\u201d Mr. Thomas came to its defense. He argued that bringing the dispute in local courts \u201ccan contribute to a resolution of a dispute, or at least a narrowing of the issues in dispute.\u201d
\n<\/span>
\nMr. Thomas also challenged, in a variety of ways, the decision to allow the MFN provision in the German-Argentina BIT to extend to dispute settlement provisions in other BITs. In his view, the dispute resolution provision sets out mandatory steps that underpin Argentina\u2019s consent to arbitration. <\/span><\/p>\n

Mr. Thomas also noted that the MFN clause in question does not refer to \u201call matters subject to this Agreement,\u201d which, in other cases, tribunals have used as a justification to include dispute resolution procedures. Moreover, Mr. Thomas believed that the treaty\u2019s drafters had in mind \u2018activities\u2019 directly related to the management and operation of the investment (for instance, the treaty provides examples like the acquisition of raw materials and the sale of products).<\/span><\/p>\n

Placing the debate over the purpose of the MFN clause in perspective, Mr. Thomas notes that it was not until the 2000 Maffezini v. Spain <\/em>decision on jurisdiction that the MFN clause was extended to dispute settlement. As such, Mr. Thomas explains that \u201cit is entirely plausible that the Contracting Parties did not specifically exclude the conditions for gaining access to dispute settlement under (the MFN provision) because it did not occur to them that the MFN clause could be used to modify (the dispute resolution) stipulations. Prior to Maffezini, that was not only a reasonable and legitimate view, it was the orthodox view.\u201d <\/span><\/p>\n

Notes <\/span><\/em><\/p>\n

The decision on jurisdiction is available at: http:\/\/italaw.com\/documents\/Hochtief_v_Argentina_Jurisdiction_24Oct2011_En.pdf<\/span><\/a><\/span><\/p>\n

Christopher Thomas\u2019 dissenting opinion is available at: http:\/\/italaw.com\/documents\/Hochtief_v_Argentina_JurisdictionDissent_24Oct2011_En.pdf<\/span><\/a><\/span><\/p>\n

Jurisdiction declined for indirectly held stakes in Slovakian health insurance companies
\n<\/strong>HICEE B.V. v. The Slovak Republic<\/span><\/span><\/p>\n

Damon Vis-Dunbar<\/span><\/p>\n

The majority of an UNCITRAL<\/span> tribunal has declined jurisdiction in a claim by a Dutch-incorporated investor after ruling that an ambiguously worded provision in the Dutch-Czechoslovakia BIT excludes investments that are routed through local subsidiaries in the host country.<\/span><\/p>\n

The 23 May 2011 partial award was made public following an access to information request to the Slovakian government by the news service Investment Arbitration Reporter<\/em>.\u00a0<\/span><\/p>\n

The claim, in which the claimant sought over a billion dollars in compensation, is in reaction to changes to Slovakia\u2019s domestic laws which affected the profitability of health insurance business. The Dutch claimant, HICEE, acquired a Slovakian holding company, Dovera Holding, which turn held stakes in various health insurance companies.<\/span><\/p>\n

As a preliminary matter, the parties agreed to focus on a provision in the BIT that states that the term investment \u201cshall comprise every kind of asset either directly or through an investor of a third state \u2026\u201d The tribunal\u2019s interpretation of this provision would determine whether HICEE\u2019s stakes in the Slovakian companies were covered by the BIT.<\/span><\/p>\n

In Slovakia\u2019s opinion, the provision meant that the BIT did not cover \u2018indirect\u2019 investments made through local subsidiaries, as was the case with HICEE\u2019s investment.<\/span><\/p>\n

In contrast, the claimant contended that the provision implied that the investment could be made either<\/em> through a Dutch company or<\/em> through a subsidiary in a third country, but in either case does not exclude investments that are then channeled through a Slovakian subsidiary.<\/span><\/p>\n

Despite objections by the claimant, the majority, comprised of Sir Franklin Berman and Judge Peter Tomka, turned to notes purportedly made by the Dutch Finance Ministry to its parliament during the treaty\u2019s ratification process. These notes seemed to back up Slovakia\u2019s position. The notes explain:<\/span><\/p>\n

\u201cNormally, investment protection agreements also cover investments in the host country (\u2018subsidiary\u2019 \u2013 \u2018sub-subsidiary\u2019 structure). Czechoslovakia wishes to exclude the \u2018sub-subsidiary\u2019 from the scope of this Agreement, because this is in fact a company created by a Czechoslovakian legal entity, and Czechoslovakia does not want to grant, in particular, transfer rights to such a company.\u201d<\/span><\/p>\n

The majority found this note to be \u201cvalid supplementary material which the Tribunal may, and in the circumstances must, take in dealing with the question before it.\u201d Given that it provided evidence in support of Slovakia\u2019s interpretation of the provision in question, the majority declined jurisdiction.
\n<\/span>
\n Judge Bower\u2019s dissent
\n<\/span><\/em>
\n In a dissenting opinion, Charles N. Bower, the claimant\u2019s appointee, shared the claimant\u2019s view that the provision described two directions from which an investment could be made \u2013 directly from the host country, or from a subsidiary in a third country \u2013 rather than a restriction on investments structured through subsidiaries in the host country. Indeed, he found the majority\u2019s interpretation, based on the Dutch notes, to be \u201cat the very least, incongruous\u201d.\u00a0<\/span><\/p>\n

In Judge Bower\u2019s view, it was unnecessary to turn to the Dutch note for interpretative guidance, given that the plain meaning of the provision. For that reason, he maintained that the Vienna Convention on the Law of Treaties, to which the tribunal turned to for guidance on whether and how to use the Dutch notes, would not support using supplementary materials to provide interpretive guidance.\u00a0<\/span><\/p>\n

Moreover, he found the Dutch note to be problematic in other ways. He questioned its reliability, for example, noting the notes were found in the governmental files in Prague, not The Hague, and that Dutch officials did not cooperate with requests for documentation.
\n<\/span>
\nHe also rejected the notion that the note signaled an agreement, or \u201cconcordance of views\u201d as termed by the majority, between the Netherlands and Slovakia, given Slovakia\u2019s self interest in supporting the information in the note in order to defend itself in the arbitration.\u00a0<\/span><\/p>\n

On the question of costs, the majority ordered the claimant to bear 60 percent of the arbitration costs, and the respondent the other 40 percent. Both parties are responsible for their own legal fees. The majority noted that the parties were cooperative during the proceedings, concise with their legal arguments, and each raised difficult and novel issues.<\/span><\/em><\/p>\n

Challenge to Judge Tomka dismissed<\/span><\/p>\n

Following the majority\u2019s decision to decline jurisdiction, the claimant filed a challenge against Judge Tomka, Slovakia\u2019s nominee to the tribunal. It argued that Judge Tomka faced a conflict of interest, on the grounds that he was seeking re-nomination to the International Court of Justice and required Slovakia\u2019s endorsement.\u00a0<\/span><\/p>\n

The President of the Stockholm Arbitration Institute rejected the challenge, albeit without\u00a0providing a reason. <\/span>
\n<\/span>
\nNotes<\/em><\/span><\/p>\n

The partial award and dissenting option are available at: http:\/\/italaw.com\/documents\/HICEEv.SlovakRepublicPartialAwardandDissentingOpinion.pdf<\/span><\/a><\/span><\/p>\n

Total damages significantly reduced in the Chevron-Ecuador arbitration
\n<\/span><\/strong>Chevron Corporation (USA) and Texaco Petroleum Company (USA) v. The Republic of Ecuador<\/em>, UNCITRAL, PCA<\/span> Case No. 34877. <\/strong><\/span>
\n
\nVyoma Jha<\/span><\/p>\n

In a final award dated 31 August 2011, an UNCITRAL tribunal awarded <\/em>Chevron and Texaco some US$96 million in a dispute with Ecuador.
\n<\/span>
\nThe ruling follows a March 2010 partial award, which held Ecuador to be in breach of the U.S.-Ecuador BIT for failing to provide the claimants an \u201ceffective means of asserting claims and enforcing rights\u201d in Ecuador\u2019s courts.<\/span><\/p>\n

The claims relate to seven lawsuits filed by Texaco Petroleum in the early 1990s against Ecuador for breaching oil exploration contracts concluded by them between 1973 and 1977. Chevron, which bought Texaco in 2001, initiated the arbitration against Ecuador in May 2006 alleging that Ecuador violated its obligation to provide fair and equitable treatment and the obligation under Article II(7) of the BIT to provide an effective means of asserting claims and enforcing rights.<\/span>[1]<\/a>
\n
\n<\/span>In its partial award, the tribunal noted that Article II(7) provides a \u201cdistinct and potentially less-demanding test\u201d than the \u201chigh threshold\u201d that must be met to establish denial of justice under customary international law. Thus, according to the tribunal the delay by Ecuadorian court in deciding the Texaco lawsuits, which had been pending for almost 13 years at the start of the arbitration, exceeded the allowable threshold under Article II(7) of the BIT. <\/span><\/p>\n

The tribunal held that the claimants were entitled to almost US$698 million in damages, which was subject to adjustments for taxes and pre-award interest.<\/span><\/p>\n

Calculation of total damages<\/span><\/em><\/p>\n

The tribunal\u2019s main consideration in the final award regarded the tax rate to apply to the <\/span>US$698 million in damages.<\/span><\/p>\n

The tribunal accepted the conclusions of party-appointed experts in Ecuadorian tax law and settled on a tax rate of 87.31% on the principal and a <\/span>25% income tax rate on the interest. These calculations brought the final award down steeply to US$96 million.<\/span><\/p>\n

On the question of the arbitration costs, the tribunal expressed a preference for the principle of \u201ccosts follow the event,\u201d apart from exceptional circumstances. However, the tribunal concluded that, since neither party was clearly successful, both sides were left to bear their own costs as well half of the tribunal costs.<\/span><\/p>\n

Recent developments<\/span><\/em><\/p>\n

Ecuador is seeking to set aside the awards on jurisdiction, liability and damages in the Netherlands, the legal site of the arbitration, on grounds that the tribunal made an \u201cerroneous interpretation\u201d of Article II(7) of the U.S.-Ecuador BIT by the tribunal.<\/span><\/p>\n

In a separate action, Ecuador initiated state-to-state arbitration against the United States on 28 June 2011. Ecuador had asked the US government to support its interpretation of Article II(7) of the BIT; however, the US did not respond. The Ecuador-US arbitration, in which Ecuador seeks a ruling on the interpretation of\u00a0 Article II(7) , will be conducted under the UNCITRAL procedural rules.<\/span><\/p>\n

Notes<\/span><\/em><\/p>\n

The tribunal in Chevron Corporation (USA) and Texaco Petroleum Company (USA) v. The Republic of Ecuador<\/em> consisted of Prof. Karl-Heinz B\u00f6ckstiegel (presiding arbitrator), Honorable Charles N. Brower (claimant\u2019s nominee) and Prof. Albert Jan van den Berg (respondent\u2019s nominee).<\/span><\/p>\n

The award is available at: http:\/\/italaw.com\/documents\/ChevronEcuadorFinalAward.pdf<\/span><\/p>\n

For ITN\u2019s previous reporting on the Partial Award dated 30 March 2010, refer \u201cTribunal finds Ecuador in breach of BIT for its judiciary\u2019s slow handling of Texaco lawsuits\u201d, by Fernando Cabrera Diaz, April 2010 available here: <\/strong>https:\/\/www.iisd.org\/itn\/2010\/04\/07\/tribunal-finds-ecuador-in-breach-of-bit-for-its-judiciary-s-slow-handling-of-texaco-lawsuits\/<\/span><\/p>\n


\n Turkey defeats US$ 10.1 billion claim, as tribunal finds no \u201cinvestment\u201d under the Energy Charter Treaty
\n<\/span><\/strong>Libananco Holdings Co. Limited v. Republic of Turkey<\/em>, ICSID Case No. ARB\/06\/8 (ECT<\/span>).<\/span><\/strong><\/p>\n

Vyoma Jha<\/span><\/p>\n

A three-member ICSID tribunal has declined jurisdiction in a dispute linked to the Uzan family. The Uzans are a wealthy Turkish family that has been enmeshed in multiple legal disputes around the world, a number related to fraud allegations against them. The family is also connected to several investment-treaty cases against Turkey, all of which have been dismissed on jurisdictional grounds.*
\n<\/span>
\nBackground of the present dispute
\n<\/span><\/em>
\nThis arbitration revolves around a US$10.1 billion claim brought by Libananco Holdings Co. Ltd., a Cypriot company, against Turkey for alleged breaches of the Energy Charter Treaty (ECT). The claimant alleged that it owned shares in two Turkish utility companies, Cukurova Elektrik Anonim Sirketi (CEAS) and Kepez Elektik Turk Anonim Sirketi (Kepez), which belonged to members of the Uzan family, prior to the incidence of the alleged expropriation.<\/span><\/p>\n

The dispute concerns the seizure of CEAS\u2019 and Kepez\u2019s assets in which Libananco claims to hold shares, and the cancellation of concession agreements between CEAS and Kepez and the government of Turkey on 12 June 2003.<\/span><\/p>\n

The claimant filed the request for arbitration against Turkey on 23 February 2006, almost three years after the alleged incident of expropriation.<\/span><\/p>\n

No \u201cinvestment\u201d by Libananco<\/span><\/em><\/p>\n

The claimant first argued that Libananco acquired shares in CEAZ and Kepez through 32 transfer agreements between October 2002 and May 2003. Later, however, Libananco changed its story and claimed that the shares in the two companies had been transferred to it prior to the alleged expropriation through three main acts of teslim<\/em>, <\/em>i.e. the legal transfer of possession under Turkish law.<\/strong><\/span><\/p>\n

The tribunal proceeded to reject Libananco\u2019s argument that it was only required to provide prima facie<\/em> evidence of ownership of the share certificate at the jurisdictional stage. In reply, Libananco offered several accounts of how it had received the shares from members of the Uzan family, but these ultimately left the tribunal unconvinced. <\/span><\/p>\n

Consequently, the tribunal held that Libananco lacked an \u201cinvestment\u201d was not an \u201cinvestor\u201d within the meaning of the ICSID Convention or the ECT.<\/span><\/p>\n

The tribunal ordered the claimant to pay Turkey US$ 602,500 in reimbursement of the Turkey\u2019s advance on costs of arbitration, as well as US$ 15,000,000 for legal fees and out of pocket expenses.<\/strong><\/span><\/p>\n

On a related note, the European Court of Human Rights (ECHR) has recently dismissed claims brought by 47 minority shareholders in CEAS and Kepez who alleged violations of the European Convention on Human Rights on account of Turkey\u2019s actions of terminating the concession and share delisting. The ECHR noted that Turkey had complied with the domestic law while delisting the shares and that the shareholders had domestic recourse to challenge the actions of Turkey. Therefore, the ECHR dismissed the claims as \u201cill-founded\u201d and \u201cinadmissible\u201d.
\n<\/span>
\nNotes<\/span><\/em><\/p>\n

The tribunal comprised of Michael Hwang (President), Henri Alvarez (Claimant\u2019s nominee) and Sir Frank Berman (Respondent\u2019s nominee).<\/span><\/p>\n

The award is available at: http:\/\/italaw.com\/documents\/LibanancoAward.pdf<\/span><\/a>
\n<\/span>
\n * Several tribunals have taken a similarly dim view of other claims against Turkey involving members of the Uzan family. For example: <\/span><\/p>\n

Europe Cement Investment & Trade S.A. v. Republic of Turkey<\/em>, ICSID Case No. ARB(AF)\/07\/2. See previous ITN reporting: \u201cTribunal dismisses claim by Europe Cement against Turkey; Claimant ordered to bear cost of the arbitration\u201d, by Damon Vis-Dunbar, September 2009, available here:<\/strong>\u00a0https:\/\/www.iisd.org\/itn\/2009\/08\/31\/tribunal-dismisses-claim-by-europe-cement-against-turkey-claimant-ordered-to-bear-cost-of-the-arbitration\/<\/a> <\/span><\/p>\n

Cementownia \u201cNowa Huta\u201d S.A. v. Republic of Turkey<\/em>, ICSID Case No. ARB(AF)\/06\/2. See previous ITN reporting: \u201cCementownia claim against Turkey found to be \u201cmanifestly ill-founded\u201d\u201d, by Elizabeth Whitsitt, November 2009, available here: https:\/\/www.iisd.org\/itn\/2009\/11\/01\/cementownia-claim-against-turkey-found-to-be-manifestly-ill-founded\/<\/a> <\/span><\/p>\n

Mr. Saba Fakes v. Republic of Turkey<\/em>, ICSID Case No. ARB\/07\/20. See previous ITN reporting \u201cClaim against Turkey deemed \u201cfrivolous\u201d\u201d, by<\/strong>\u00a0Damon Vis-Dunbar, September 2010, available at: https:\/\/www.iisd.org\/itn\/2010\/09\/23\/awards-and-decisions\/<\/a><\/span><\/p>\n

\n
\n
\n

[1]<\/span><\/a>Article II(7) of the US-Ecuador BIT provides \u201cthat each Party must provide effective means of asserting rights and claims with respect to investment, investment agreements and any investment authorizations\u201d.<\/span><\/p>\n<\/div>\n<\/div>\n