Russia is obliged to protect the Ukrainian investors in Crimea after the annexation – IA Reporter
In a dispute about the definition of jurisdiction, the arbitrators ruled that under the bilateral investment Treaty, Russia is obliged to protect the Ukrainian investors in Crimea due to annexation.
This is stated in the article, Luke Eric Peterson, published on the website Investment Arbitration Reporter.
In several decisions handed down on 24 February 2017 is identical to the established tribunals to deal with concurrent actions against the Russian Federation, some of the main jurisdictional objection was rejected.
In particular, arbitrators have recognized the principle that Russia may bear responsibility, in accordance with the bit between Ukraine and Russia, for the violation of investors ‘ rights on the Crimean Peninsula after Russia signed a decree on the inclusion of the disputed territory into the Russian Federation.
Apparently, this is the first case where the Tribunal decided to extend the protection bits under these circumstances.
The claims arose in connection with the banking and investment of airports, Russia denies jurisdiction but not appearing on the arbitration proceedings
Legal innovations occurred in the cases of Igor Kolomoisky and “the Airport “Belbek” against Russia and “PrivatBank” and “Vinylon” against Russia, several arbitration proceedings were launched in 2015 in the framework of the bilateral investment Treaty between Ukraine and Russia.
As previously reported, an arbitral Tribunal composed of Pierre-Marie Dupuy (President), Daniel Bethlehem (arbitrator plaintiff) and St. Mikulski (the arbitrator chosen by the competent authority) listened to each of those matters.
Although the Russian Federation did not appear for the defence in the cases, in letters sent to the Permanent court of arbitration, Russia argues that “[bits of Ukraine and Russia] can not serve as the basis for drafting the arbitration Tribunal to resolve [the plaintiffs claims],” and that it “does not recognize the jurisdiction of international arbitration [PCA] in settlement of [plaintiffs’ claims]”.
Despite the fact that Russia had not made an objection to a claim, and did not set out the jurisdictional objections, the tribunals as in the cases of “PrivatBank” and “Airport “Belbek” decided to split their trial to consider certain questions of jurisdiction and admissibility.
The Tribunal deviates from the solution of the question of the legality of occupation and annexation, but considers them valid – legal consequences according to the bits
In the interim decisions reported recently, tribunals have rejected some of the key objections, apparently, leaving some other jurisdictional issues (e.g., existence of protected investments) for consideration at a later stage of the proceedings.
In particular, IAReporter has confirmed that the tribunals have determined that the Russian Federation has obligations for the protection of Ukrainian investors in Crimea in the framework of a bit between Russia and Ukraine starting from March 21 2014. Although the appellants insisted at an earlier period of the occupation of the territory of Russia, the court established a deadline of 21 March 2014, the date of signing by the President of Russia Vladimir Putin the decree on the inclusion of Crimea into the Russian Federation.
The arbitrators ruled that the protection under the bit are applicable to the applicants in connection with the alleged infringement of their respective investment banking businesses and commercial airport in the Crimea.
While IAReporter will not see copies of the interim solutions, which remain confidential, the detailed arguments of the arbitrators in reaching the above conclusions remain unclear.
However, it seems that the arbitrators have shied away from the difficult question of the legality of the Russian occupation and annexation of the Crimea, instead they focused on the reality of the occupation and consistent conclusion that Russia should be responsible for the protection of Ukrainian investors in this area.
(The state of Ukraine intervened in the arbitration as a third party and presented arguments, including those that represent the occupation as illegal, but ultimately valid (which Russia must bear responsibility for the protection of Ukrainian investors in accordance with the bit)).
The plaintiffs in the Affairs of “PrivatBank” and “Airport “Belbek” I represent a legal firm Hughes Hubbard, a lawyer from Sweden and the referee of Kay Haber. Ukraine during accession to the proceedings were represented by Covington & Burling.
It is noteworthy that at the end of 2016 failing “PrivatBank” was nationalized by Ukraine, in consequence of which, it seems, the position of Ukraine in this particular case bits has changed.
Continue at least five other cases in the bit between Ukraine and Russia-related events in the Crimea, decisions are expected
A number of other lawsuits related to the Crimea, as in the arbitral proceedings under the same contract in other tribunals, including several cases dealt with by the Tribunal under the chairmanship of Gabriel Kaufmann-Kohler (along with co-arbitrators Daniel Pryce and Brigitte stern), court hearings were held in the same month, August 2016, and hearings in the above cases of “PrivatBank” and “Airport “Belbek”.
These two other cases, the case of “Ukrnafta”, it’s “Stable” and others are also considered on the claim of the companies controlled by Ukrainian oligarch Igor Kolomoisky, and relate to the loss of gas stations in the Crimea.
Another case on the issue of shares by Kolomoisky in OOO “Everest Estates” and others relate to the investment in real estate in the Crimea, the hearings on these cases took place in December 2016, with a Tribunal composed of Andres Rigo Sureda (Chairman), Michael Reisman (arbitrator plaintiff) and Rolf Kniper (the arbitrator selected by the appointing authority).
As we already reported, in the process of reviewing two cases involving Crimea, including the claim of the state Bank “Oschadbank” before the Tribunal, composed of David A. R. Williams (Chairman), Charles N. Brauer and Hugo Diaz Perezcano, and the other to the claim of OOO “Luthor” and other persons heard by the Tribunal composed of Donald macra (Chairman), Bruno Simma and Eduardo Zuleta.