Originally from Journal of Damages in International Arbitration

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I. INTRODUCTION

In Micula v. Romania, an ICSID tribunal found that the Government of Romania had breached the Agreement Between the Government of the Kingdom of Sweden and the Government of Romania on the Promotion and Reciprocal Protection of Investments (“BIT”) by prematurely revoking certain economic incentives that the Claimants1 had relied upon in making substantial investments in disfavored regions of Romania. As a result, the Tribunal awarded the Claimants approximately USD 250 million in damages and interest.

II. BACKGROUND

In December of 1989, Romania found itself in economic and social crisis following the overthrow of the Ceauşescu regime. It thus sought to attract both foreign and domestic investment through a variety of economic incentives programs. One such program, Emergency Government Ordinance 24/1998 (“EGO 24”), was promulgated to aid the development of certain disfavored regions in Romania. In these regions, investors were required to meet certain criteria, which would then allow them to enjoy certain tax incentives and customs duties exemptions.