Bilateral Investment Protection Treaties - Chapter 4 - Investment Arbitration in Eastern Europe: In Search of a Definition of Expropriation
Kaj Hobér is a Partner with Mannheimer Swartling Advokatbyrå in Stockholm and Professor of East European Commercial Law at Uppsala University. He has been heavily involved in the legal aspects of doing business in Eastern Europe and the former Soviet Union for the last 25 years. His arbitration experience includes representing both Eastern and Western European, American and Russian parties as well as parties from developing countries in international arbitrations. He has also been involved in numerous oil and gas arbitrations, relating primarily to Northern Africa, the Middle East and the former Soviet Union. He has acted as counsel and arbitrator (including chairmanships) in more than 300 international arbitrations, including representation of the claimant in the first ECT award, as well as involvement in many other investment arbitrations. He is Chair of the IBA sub-committee on Investment Treaty Arbitration, a member of the board of the Arbitration Institute of the Stockholm Chamber of Commerce, the International Arbitration Club (London) and a member of the ICC Institute of International Business and Law (corresponding member).
Professor Hobér is the author of Joint Ventures in the Soviet Union (1989), Enforcing Foreign Arbitral Awards Against Russian Entities (1993), Transforming East European Law (1997), Protection of Property Rights in the Baltic Sea Region: Reality or Potemkin Villages? (1999), Applicable Law and Extinctive Prescription in Interstate Arbitration (2001), The Impeachment of President Yeltsin (2003), Essays on International Arbitration (2005), and is also the general editor of the Uppsala Yearbook of East European Law, and co-editor of Arbitration in Sweden (2nd ed., 1984). He has also published numerous articles on international arbitration and East European law.
Originally from Investment Arbitration in Eastern Europe: In Search of a Definition of Expropriation
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In the following I shall discuss a number of disputes which have arisen under BITs involving East European states, including the former Soviet Union. Some of these disputes have resulted in arbitral awards, others have been settled, or not even reached the stage of formal arbitral proceedings. Also the latter categories – i.e. disputes which have not resulted in arbitral awards – may, however, be of significant interest and importance, at least in so far as they address the question of indirect expropriation and thereby help us to define the concept. Consequently, I include them in my discussion.
As explained above, I shall focus only on the concept of expropriation, the ultimate questions being: what amounts to expropriation and where to draw the line between expropriation and legitimate governmental measures? All the cases discussed in the following raise many other interesting and difficult issues relating to BITs and to investment arbitration. Many of them deal with the definition of “investment” under a BIT, and with the nationality of claims. Almost all of them address the question of how to determine and calculate the compensation due. Other cases raise interesting procedural questions relating to res judicata, lis pendens, exhaustion of local remedies etc. All these issues are important for the proper understanding of the possibilities and limitations of investment arbitration. It is not possible, however, to address also these issues in this publication.
Some of the arbitral awards discussed below are in the public domain. In such cases I mention parties by name. With respect to awards and disputes which are not in the public domain I shall refrain from using the names of the parties.
The disputes are discussed in chronological order.
As mentioned in the foregoing, the difficult task facing most arbitral tribunals is to draw the line between indirect expropriation and legitimate government measures and/or regulation. In resolving this issue the factual circumstances of each individual case play an important, indeed decisive, role. For an arbitral tribunal it is always necessary to determine as precisely as possible what governmental measures were taken, and under what circumstances, as well as the consequences of the measures. This explains why it is so important to understand – and evaluate in detail – the factual circumstances of each case. This also explains why I describe the facts in each case in a rather detailed fashion.
IV. Bilateral Investment Protection Treaties
1. Introduction
2. The Sedelmayer Case
2.1 The Background
2.2 The Dispute
2.3 Comments
3. The 1998 Financial Crisis in Russia
3.1 Introduction
3.2 Measures Taken by the Russian Federation
3.3 Do the Measures Amount to Expropriation?
4. The Tradex Case
4.1 The Background
4.2 The Dispute
4.3 Comments
5. The Land Use Permit Case
5.1 The Background
5.2 The Dispute
5.3 Comments
6. The SwemBalt Case
6.1 The Background
6.2 The Dispute
6.3 Comments
7. Golden Shares in Russia Companies
7.1 The Background
7.2 Do Golden Shares Constitute Indirect Expropriation?
8. The Estonian Bank Licence Case
8.1 The Background
8.2 The Dispute
8.3 Comments
9. The Lauder Cases
9.1 The Background
9.2 The Dispute
9.3 The Stockholm Award
9.4 The London Award
9.5 Comments
10. The Moldovan Case
10.1 The Background
10.2 The Dispute
10.3 Comments
11. The Ukrainian Case
11.1 The Background
11.2 The Dispute
11.3 Comments
12. The Refinery Case
12.1 The Background
12.2 The Dispute
12.3 Comments
13. The Romanian Case
13.1 The Background
13.2 The Dispute
13.3 Comments