{"id":291,"date":"2009-08-28T09:33:00","date_gmt":"2009-08-28T14:33:00","guid":{"rendered":"http:\/\/itn.mattrock.ca\/2009\/08\/28\/pantechniki-s-a-contractors-engineers-v-the-republic-of-albania-fork-in-the-road-provision-partially-bars-claim-by-greek-investor\/"},"modified":"2013-02-01T05:08:58","modified_gmt":"2013-02-01T11:08:58","slug":"pantechniki-s-a-contractors-amp-engineers-v-the-republic-of-albania-fork-in-the-road-provision-bars-claim-by-greek-investor","status":"publish","type":"post","link":"https:\/\/www.iisd.org\/itn\/2009\/08\/28\/pantechniki-s-a-contractors-amp-engineers-v-the-republic-of-albania-fork-in-the-road-provision-bars-claim-by-greek-investor\/","title":{"rendered":"Pantechniki S.A. Contractors & Engineers v. The Republic of Albania: Fork-in-the-road provision partially bars claim by Greek investor"},"content":{"rendered":"

By Damon Vis-Dunbar<\/strong>
\n2 September 2009<\/strong><\/p>\n

A Greek company\u2019s decision to litigate in Albania\u2019s domestic courts has prevented it from arbitrating a similar claim under the Albania-Greece bilateral investment treaty.<\/p>\n

The Claimant, Pantechniki S.A. Contractors & Engineers, sought to recoup losses sustained during the wide-spread civil strife that shook Albania in 1997 when some two-thirds of the population lost their savings in Ponzi schemes. The Greek investor, which was under contract to construct roads in Albania, had its work site overtaken by rioters.<\/p>\n

The Ministry of Public Works had committed to compensating the Claimant for its losses, but both the Public Works Ministry and the Finance Ministry claimed to be prevented from doing so. According to the Claimant, the Finance Minister at the time recommended bringing a case to court, on the grounds that a court order would allow his ministry to provide compensation.<\/p>\n

Following a series of unfavourable court decisions, however, Pantechniki abandoned its efforts before Albania\u2019s judiciary and filed a claim under the Albania-Greece BIT<\/span> in 2007.<\/p>\n

As it is, the Claimant\u2019s decision to turn first to Albania\u2019s courts proved fatal to its efforts to arbitrate a similar claim under the Albania-Greece BIT. The BIT\u2019s so-called fork-in-road provision requires that investors elect either courts or an international arbitration tribunal to settle disputes.<\/p>\n

\u201cThe Claimant chose to take this matter to the Albanian courts\u201d, writes the sole arbitrator, Jan Paulsson, in the 30 July 2009 award. \u201cIt cannot now adopt the same fundamental basis as the foundation of a Treaty claim. Having made the election to seize the national jurisdiction the Claimant is no longer permitted to raise the same contention before ICSID<\/span>.\u201d<\/p>\n

While Pantechniki was prevented from arbitrating a dispute which had already been brought before Albanian courts, Paulsson held that several other causes of action were not disbarred. These are the claims that Albania failed to offer the Claimant \u201cfull protection and security\u201d and \u201cfair and equitable treatment\u201d and that the Albanian courts had committed a denial of justice. Ultimately, Paulsson ruled that these further causes of action failed on their merits.<\/p>\n

In determining whether Albania violated its duty to provide the Claimant \u201cfull protection and security\u201d, Paulsson prefaced his decision by noting that a host country\u2019s level of development required consideration.\u00a0 Given the \u201cenvironment of desolation and lawlessness\u201d in Albania at the time that the Claimant established its investment, Paulsson determined that it was unreasonable to expect high standards of police protection.<\/p>\n

Paulsson noted that his assessment of the claim may have been different if police had refused to intervene. But having determined that Albanian police were powerless to protect the Claimant\u2019s investment, Paulsson concluded that Albania had not breached its duty to provide full protection and security.<\/p>\n

Paulsson also went on to reject the denial of justice claim, despite taking a dim view of the courts\u2019 treatment of the Claimant.<\/p>\n

The Claimant argued before Albania\u2019s courts that the General Road Directorate had assumed responsibility for losses due to civil disturbances under contract. Yet the courts ruled that the relevant contractual clause could not be upheld under Albanian law.<\/p>\n

Paulsson confessed to being \u201ctroubled\u201d by the courts\u2019 decision, noting that the clause deemed null by the courts is a common one, appearing \u201cin myriad international construction contracts.\u201d<\/p>\n

Nonetheless, Paulsson stressed that a denial of justice does not arise until \u201ca reasonable opportunity to correct aberrant judicial conduct has been given to the system as a whole.\u201d By electing not to try its case before Albania\u2019s Supreme Court, Paulsson found that the Claimant had not given the Albanian legal system an adequate opportunity to address the failures of its lower courts.<\/p>\n

While rejecting all of Pantechniki\u2019s claims, Paulsson nonetheless ordered that the parties split the cost of the proceedings, noting that the Greek investor appears to have a valid contractual complaint, even if it could not seek refuge under the Albania-Greece BIT due to its fork-in-the-road clause. He also praised the lawyers representing Albania and Pantechniki, noting that the legal fees (EUR 154,523 in the case of Pantechniki and EUR 269,657 in the case of Albania) \u201care but fractions of the cost claims submitted in other ICSID cases. Yet the written and oral presentations were highly competent.\u201d<\/p>\n

The award, Pantechniki S.A. Contractors & Engineers v. The Republic of Albania (ICSID Case No. Arb\/07\/21) is available here: http:\/\/ita.law.uvic.ca\/documents\/PantechnikiAward.pdf<\/a><\/p>\n