MOL Hungarian Oil and Gas Company Plc v. Republic of Croatia (ICSID Case No. ARB/13/32), Decision of the Tribunal on Preliminary Objections (December 2, 2014)
I. Introduction
1. This is the Tribunal’s Decision on an application under Arbitration Rule 41(5) lodged by the Republic of Croatia (“the Respondent”) through which the Respondent seeks to have the Tribunal “[d]ismiss … for lack of legal merit” the arbitration proceedings launched against it by MOL Hungarian Oil and Gas Company Plc (“the Claimant”), a juridical person organized under the laws of Hungary and engaged primarily in the exploration, production, refining, and marketing of hydrocarbons.
2. Were the Tribunal to uphold the Respondent’s application, Rule 41(6) requires that that be done by an Award. As the Tribunal has however concluded that the application must be rejected, it will do so by way of the present Decision, for the reasons set out below which, in the circumstances, can be relatively brief.
A. Registration of the Request
3. The Claimant’s request for arbitration (the “Request”) was filed with the Centre on 26 November 2013, citing as its basis the Energy Charter Treaty (the “ECT”) of 17 December 1994, to which it is uncontested that both Croatia and Hungary are Parties, and was registered by the Secretary-General on 5 December 2013, as ICSID Case No. ARB/13/32.
B. Constitution of the Tribunal
4. The Parties reached agreement on a commonly used formula under which each would appoint its arbitrator within a given time, following which the two arbitrators so appointed would within 30 days, in consultation with the Parties, jointly select a third arbitrator to serve as President.
I. Introduction ........................................................................................................................ 1
A. Registration of the Request ........................................................................................... 1
B. Constitution of the Tribunal .......................................................................................... 1
C. Written and Oral Proceedings ....................................................................................... 2
D. MOL’s Claims .............................................................................................................. 4
II. The Respondent’s Rule 41(5) Application ....................................................................... 7
A. Introduction ................................................................................................................... 7
B. Because it is a Hungarian Investor, the Claimant’s Umbrella Clause claim is
manifestly without legal merit under Annex IA to the ECT ......................................... 9
1. The Respondent’s Argument ...................................................................................... 9
2. The Claimant’s Response ......................................................................................... 10
C. The forum selection clauses in the Agreements preclude MOL from bringing its
“contracts claims” outside the forum stipulated in those contracts ............................ 12
1. The Respondent’s Argument .................................................................................... 12
2. The Claimant’s Response ......................................................................................... 13
D. The criminal prosecution of Mr Hernádi .................................................................... 14
1. The Respondent’s Argument .................................................................................... 14
2. The Claimant’s Response ......................................................................................... 14
E. Further Preliminary Objections ................................................................................... 15
F. The post-Hearing argument ........................................................................................ 15
III. Tribunal’s analysis ........................................................................................................... 16
IV. The Respondent’s alternative application for a stay .................................................... 22