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Stockholm Arbitration Report (SAR)

Preview Page SAR 2004 - 2

Observations by Noah Rubins, Farouk Yala and Dany Khayat

Subject-Matters:
(1) Jurisdiction under a Bilateral Investment Treaty.
(2) Definition of investment.
(3) Definition of expropriation and the duty to compensate for expropriation.
(4) Failure of Respondent to appear (procedural default).
(5) State responsibility for actions of municipal authorities (agencies/subdivisions).
(6) Determining the rate of interest on amounts awarded.
(7) Whether the losing party shall be ordered to pay the costs of the arbitration.

Findings:
(1) The Tribunal found that it had jurisdiction under the Sweden- Latvia Bilateral Investment Treaty, because:
(a) a dispute exists between the Swedish claimant and Latvia;
(b) SwemBalt is an investor in the sense of Article 1 (3) (b) of the BIT, as a legal person having its seat in Sweden.
(2) There is no basis for doubt about SwemBalt’s ownership of the ship that is the subject of the dispute, which constitutes an investment under the treaty, and SwemBalt showed that, in all likelihood, it complied with Latvian law. Latvia failed to demonstrate that the investment was not made in accordance with Latvian law; and, in any event, Latvia’s actions were out of proportion with any non-compliance that may have existed.
(3) By taking SwemBalt’s ship, preventing SwemBalt from using it, and by auctioning it without any compensation to SwemBalt, Latvia breached its obligations under the BIT and general international law.