The two international claims brought by Petrobart Ltd (“Petrobart”), a Gibraltar company, against the Kyrgyz Republic have recently been the subject of judgments by the Swedish Supreme Court and the Svea Court of Appeal. These judgments respectively (a) set aside an award rendered pursuant to the Kyrgyz Foreign Investment Law (“the Foreign Investment Law” or “the Law”) which had declined jurisdiction over Petrobart’s first claim, made under the Law, on the ground that it did not arise out of a covered investment; and (b) upheld an award on the merits in favour of Petrobart’s second claim made pursuant to the provisions of the Energy Charter Treaty (“ECT”).

 

The background of these judgments, and the history of Petrobart’s claims, are as follows. On 23 February 1998, Petrobart entered into Goods Supply Contract No. 1/98-PB (“the Contract”) with the state joint stock company Kyrgyzgazmunaizat (“KGM”). Pursuant to the Contract, Petrobart as Supplier was to “supply and transfer ownership of two hundred thousand (200,000) tons of stable gas condensate (the ‘goods’) to [KGM] over the course of one year on a monthly basis.” The total price of the Contract was just under US$30 million. Between February and March 1998, Petrobart issued five invoices for the sale and delivery of gas. KGM defaulted on the last three of these invoices. On 25 December 1998, Petrobart obtained judgment against KGM in the Bishkek City Court of Arbitration, having previously obtained the seizure or attachment of certain assets of KGM. The Court postponed execution against these assets, which was due to take place in February 1999, at the request of both KGM and the Kyrgyz Government. In early April 1999, KGM motioned the Court to be declared bankrupt.