Ten Most Famous Cases of International Commercial Arbitration Resolved in the World

International commercial arbitration

International commercial arbitration has continued to play a major role in businesses and the facilitation of peaceful co-existence on the international scene. In recent years, the system has successfully handled certain business and commercial disputes that would have been difficult to resolve in the national court.

With different international seats and institutions like the SCC, many international cases have been successfully put to bed, with some of them incredibly famous to the extent of taking over the media and commanding attention from even the most informed arbitrators.


This article will consider these famous Cases of International Commercial Arbitration resolved around the world to give readers an understanding of the system and how it works

Franz Sedelmayer Vs The Russian Federation

Case type: International Investment Agreement
Case ID:
Treaty: Germany-Russian Federation BIT
Section: SCC Awards, SCC Arbitration Rules
Outcome: favor of the investor

Summary of The Case

Country: Russian Federation, Germany

Claimant: Sedelmayer

Respondent: Russian Federation

IIA Breaches Alleged

Direct Expropriation

IIA Breaches Found

Direct Expropriation

The Franz Sedelmayer v. The Russian Federation case has continued to be one of the biggest cases in the history of investor-state disputes and arbitration as a whole. The case, which received global attention, was filed on October 10, 1995. The claimant Mr. Sedlmayea who is of German nationality, activated the Germany-Russian Federation BIT following the confiscation of his consultancy firm and the land in Russia.

While Russia aggressively denied the allegations and even carried out intimidation tactics against the claimant to kill the case, the SCC seat provided the needed support to ensure a fair hearing from both parties.

The case initially started when the claimant, a special security consultant, reached an investment agreement to establish a security consultancy office with a section of Rusia forces.

The investment details initially left the claimant and the Russia Police force as joint owners of the security consulting firm, with the police force providing the premises while the claimant provided law enforcement equipment and relevant training.

However, after several years of the firm establishment, the Russian Government set out to forcefully confiscate the properties of the claimant, and the event triggered the latter to file an arbitration action on alleged direct expropriation. As a result, the claimant sought compensation to the tone of 7.60 mln USD. The tribunal, however, awarded only 2.30 mln USD after ruling in the claimant’s favor on July 7, 1998.

Russia, however, did not make payments for the compensation willingly and was extremely aggressive. Finally, the State eventually conceded, and It was until 2014, it finally paid the whole amount for the seized property.

This case has gone on to be studied in Law and Arbitration, with significant focus being on the reality that investors face in claiming their awards from hostile states that barely respect international rulings.

Hulley Enterprises Limited, Veteran Petroleum Limited, and Yukos Universal Limited Vs. Russia Federation

Case type: International Investment Agreement

Treaty: The Energy Treaty (1994)

Section: UNCITRAL Awards, UNCITRAL Arbitration Rules 1976

Outcome: favor of investors

Summary of The Case

Country: Russia

Claimants: Hulley, Enterprises limited and two others

Respondents: Russia

IIA breaches Alleged

Direct and Indirect Expropriation

Fair and equitable treatment/Minimum standard of treatment, including denial of justice claims

Full protection and security, or similar

Arbitrary, unreasonable and/or discriminatory measures

IIA breaches found

Direct and Indirect Expropriation

Fair and equitable treatment/Minimum standard of treatment, including denial of justice claims

Full protection and security, or similar

Arbitrary, unreasonable and/or discriminatory measures

The three aforementioned companies VS Russia is one of the most popular and biggest cases in international commercial arbitration. The claimants are separate companies, and each pursuing expropriation allegation against for investments in the same companies separately filed an arbitration action against Russia. All three firms accused Russia of Direct and Indirect Expropriation and other hostile measures through its action against OAO Yukos, an Oil company based in Russia. All firms were invested in the company, and Russia, due to political motivation, had targeted major stakeholders of the company (including the claimants’ top owners) and deliberately destroyed and liquidated it.

OAO Yukos was liquidated completely in 2007 after a series of illegal auctions and assets seizure by the Russian State. The investing claimants in 2013 separately filed an arbitration action against the State. All claimants had the same arbitration team but had their separate tribunal. The Arbitration rule was the UNCITRAL arbitration rule, and the clause was the Energy Charter Treaty.

Each tribunal decided to hear all claimant’s arguments as one and formed what was called the Tribunals.
On July 18, 2014, the tribunal ruled in favor of the claimants against Russia. While the results were expected, the total amount of damages was a shocker as it totaled a record-breaking Fifty Billion U.S. dollars ($50,000,000,000).

Apart from the damages ordered, Russia would pay for the Claimants arbitration cost, which totaled €4.2 million representation cost of over US$ 60 million.

The result and decision reached by the Tribunals are the first of their kind and give hope to investors that are looking to pursue a claim against hostile policies and actions from a state. Other Yukos investors were expected to take a cue and pursue damage compensation against Russia.

Danone Group V Hangzhou Wahaha

Case type: International Investment Agreement

Case ID: SCC Case No. 061/2007

obligation: Commercial Contractual obligation

Section: SCC Awards, SCC Arbitration Rules

Case Summary

Country: China, France
Claimant: Danone Group
Respondent: Hangzhou Wahaha

The French establishment Danone V China Wahaha food group dispute is a popular arbitration dispute that featured the aforementioned food giants. Both companies formed a joint venture (J.V.) which bore the name of Wahaha and had its headquarters in China. Danone pumped $45,000,000 into the J.V., which both companies agreed will bear the Hangzhou Wahaha name, and this injection catapulted it to the top.

The deal was entered in 1996, and by the early 2000s, china was Danone Group’s biggest market due to the J.V. However, disputes between the two companies became public in 2007, and Danone filed an arbitration action against Wahaha on the SCC Arbitral rules.


At the Arbitral tribunal, Danone stated that while Hangzhou Wahaha was obligated to honor the J.V. contracts, it secretly established parallel companies that directly compete with the J.V..

The French food group also claimed that Wahaha also illegally fixed bad policies for the J.V to deliberate limit its growth and favored the secretly established companies. It stated that Wahaha had sold the Joint venture branded product and also kept the revenue to itself.

Wahaha countered and stated that the non-JV companies were not in any way secret and that they bear its personal trademark and not that of the J.V. (the J.V. also bear Wahaha, and Danone never acquired the trademark solely for the J.V. despite trying at the time of the contract)

The case lasted for two more years, and it was until September 30, 2009, the tribunal, under the SCC guideline, concluded that Wahaha had infringed on the contract to fair partnership with Danone. It also stated that that the latter pay damages up to €890 million.

However, that same day after the ruling, the two disputing firms settled their cases, with Wahaha offering Danone €300 million to relinquish its 51% right on the J.V. Danone agreed to the settlement.

AES Summit Generation Ltd. v. Hungary

Case type: International Investment Agreement
Case No: ICSID ARB/01/4
Treaty: The Energy Charter Treaty (1994)
Section: ICSID Awards, ICSID Rules
Outcome: Favor of the State

Summary of The Case

Country: Russian Federation, Germany
Claimant: AES Summit Generation Ltd
Respondent: Hungary

IIA breaches alleged

Indirect expropriation

Fair and equitable treatment/Minimum standard of treatment, including denial of justice claims

Full protection and security, or similar

National treatment

Most-favored nation treatment

Arbitrary, unreasonable and/or discriminatory measures

IIA breaches found

None – all claims dismissed at the merits stage

AES Summit Generation Limited or AES Summit, and its fully controlled Hungary branch AES-TiszaErömü Kft, entered an agreement with the Hungary government that saw them enjoy a better pricing model in sales of generator plants in the country. However, the Hungaria branch will be obligated to develop Borsod, which was achieved with the company spending over EUR 98 million to retrofit certain power stations.

Following a threat of arbitration action from the claimant in 2000, both the State and the AES Summit reached an agreement for a new pricing model known as the 2001 settlement agreement that gave AES Summit and its Hungarian branch the edge in selling its generated power to the State.

The agreement saw the State abolish its national generator pricing in 2004 to favor AES. However, in 2006 and 2007, the State again reintroduced its former pricing system. AES Summit responded by filing an arbitration under the ICSID Rules with a claim of up to 230 million U.S. dollars.

However, the tribunal ruled in favor of the State due to its (the tribunal) lack of jurisdiction on some of the alleged breaches stated and the power of Hungary to set certain laws that protect its interest. The claimant claim was rejected, and a final award was issued on September 23, 2010

This case in the mid-2000s provided lessons for arbitrators to hire an expert arbitrator who will thoroughly crosscheck a treaty before choosing to invest in any state.

B.G. Group, PLC v. Republic of Argentina

Case type: International Investment Agreement

Treaty: Argentina-United Kingdom BIT
Section: UNCITRAL Awards, UNCITRAL Rules (1976)
Outcome: favor of the investor

Summary of The Case

Country: Argentina
Claimant: B.G. Group Plc.
Respondent: Argentina

IIA breaches Alleged

Indirect expropriation

Fair and equitable treatment/Minimum standard of treatment, including denial of justice claims

Full protection and security, or similar

Umbrella clause

Arbitrary, unreasonable and/or discriminatory measures

IIA breaches found

Fair and equitable treatment/Minimum standard of treatment, including denial of justice claims

Full protection and security, or similar

Umbrella clause

Arbitrary, unreasonable and/or discriminatory measures

In this particular case, the claimant is the United Kingdom B.G. Group PLC that had invested in Argentina by buying the biggest shares in MetroGas to access the natural gas in Buenos Aires. Argentina entered the contract with the Argentina-United Kingdom BIT as the investment treaty for dispute settlement on the occurrence of disputes.

When entering the contracts in the 1970s, Argentina law ensured that gas tariffs were computed on the basis of U.S. dollars to allow gas companies to make more profit. However, following the effect of Argentina’s financial crisis in 2001, the country implemented a new gas tariff calculation that had an exchange rate of a dollar to a peso. At the time, the dollar was significantly higher than the Argentina Peso, which meant that the B.G. Group would have shortages in profit.

B.G. Groups filed for arbitration in 2003 with the UNCITRAL Rules as the basis of judgment and the Argentina-United Kingdom BIT of 1976 as the empowering treaty clause. B.G. Groups argued before the tribunal that Argentina had breached the invested agreement and illegally carried out expropriation that violates its obligation to protect its (B.G. Groups) interest as outlined in Article 2.2 of the Bilateral Investment treaty.

In 2007, the arbitration tribunal stated Argentina had not carried out any expropriation activities but indeed violated certain terms of the agreement, including the lack of protection of the investment and the Umbrella Clause. The tribunal also waived Argentina’s argument that cases that were submitted to local courts of host states will have to be in courts for 18 months before a tribunal can decide on it.

While B.G. Groups had filed for the U.S. $238,100,000, the tribunal ordered that Argentina pay the U.S. $185,285,485. Also, the State was ordered to pay all the arbitration costs of B.G. Groups.

Cementownia “Nowa Huta” S.A. v. Turkey

Case type: International Investment Agreement
Case No: ICSID ARB(AF)/06/2
Treaty: The Energy Charter Treaty 1994
Section: ICSID Awards, ICSID Arbitration Rules
Outcome: favor of the investor

Summary of The Case

Country: Poland. Turkey
Claimant: Cementownia “Nowa Huta” S.A.
Respondent: Turkey

IIA Breaches Alleged

Unreasonable or discriminatory measures
Indirect expropriation
Most constant protection and security

IIA Breaches Found

None Found

In a case of alleged expropriation filed in 2006 under the ICSID rules, the claimant, Cementownia, a polish company, bought shares and invested in two hydroelectric companies in Turkey; Kepez Elektrik Türk AS and Cukurova Elektrik A.S.

Both companies had reached an agreement with the Turkish Government for generating, transmitting, distributing, and marketing electricity all over the country.

The contract was the major motivation of the claimant investing in the country. However, the Turkish Government terminated the Concession agreement with both companies, prompting the claimant to activate the Energy Charter Treaty clause with a claim of up to USD 4,648,157,41.1

The tribunal rejected Cementownia’s Claim and right to pursue international investment disputes as it and its owners are Turkish, and by the requirement for an Investor-state dispute to hold, the investing company or claimant must be different from the host state.

The tribunal also could not establish Cementownia’s claim of owning shares in the two companies over failure to produce documents. The tribunal issued an award to Turkey and mandated Cementownia to pay a total cost of USD 4,904,822.06 for Turkey’s arbitration costs.

Energoalians Ltd. v. Moldova

Case type: International Investment Agreement
Treaty: Energy Charter Treaty 1994, Ukraine-Moldova BIT
Section: UNCITRAL Awards, UNCITRAL ad hoc Rules
Outcome: favor of the investor

Summary of The Case

Country: Ukraine, Moldova
Claimant: Energoalians Ltd.
Respondent: Moldova

IIA Breaches Alleged

No less favorable treatment than that required by international law
Fair and equitable treatment
Unreasonable or discriminatory measures
Indirect expropriation
Stable, equitable, favorable, and transparent conditions
Effective means for the assertion of claims and the enforcement of rights

IIA Breaches Found

Stable, equitable, favorable, and transparent conditions

Fair and equitable treatment

In a case filed in 2010, the claimant Energoalians Ltd claimed that Moldova had breached the agreed contract reached between both parties in the 1990s. The claimant had invested in a state-owned power supply company following an agreement that Moldova would continually purchase power from the company. The respondent agreed to the contract ad the corresponding treaty clause.

Moldova purchased power from the company as agreed and accumulated debts on supplied services from 1999-2000 following deliberate evasion of payments. The power supply company, in response, stopped the supply of its services to the Government.

The claimant invoked the ECT and the Corresponding BIT before the hearing tribunal and claimed damages worth MDL 243,577,971.11 (USD 49 million). The tribunal ruled in the firm favor and found the respondent to have breached the (i) ECT rules of Stable, favorable, equitable, and transparent conditions, among other investment breaches

The tribunal awarded a total amount of MDL 195,547,212 (USD 14,900,000) to the claimant in 2013.

The P.V. Investors v. Spain

Case type: International Investment Agreement
Case ID: PCA Case No. 2012-14

Treaty: Energy Charter Treaty 1994
Section: UNCITRAL (PCA) Rules
Outcome: favor of the investor

Summary of The Case

Country: Luxembourg, Netherlands, Germany, Spain

Claimant: Mercurio Solar S.à.r.l.; Tyche Solar S.à.r.l.; Ampere Equity Fund B.V.; Element Power Holdings B.V.; and others
Respondent: Spain

IIA Breaches Alleged

Fair and equitable treatment
Unreasonable or discriminatory measures
Stable, equitable, favorable, and transparent conditions
Most constant protection and security

IIA Breaches found

Fair and equitable treatment

A group of European investors, numbering over 10, filed a claim for compensation due to a series of energy reforms implemented by Spain, which affected the renewables sector.

The measures were implemented in 2010 and introduced several changes to the former energy policy regime of 2007. The new rules included a 7 percent tax on power generators’ revenues and decreased subsidies for renewable energy producers.

The investors arguing on the basis of the 1994 Energy Charter Treaty stated that Article 10(1) of the treaty had been breached. The quoted article stated that investors should be provided with stable and fair treatment and freedom from discrimination by encouraging them to invest in the Spanish renewable energy sector based on the 2007 scheme and under the expectation that the scheme would remain in force.

The Permanent Court of Arbitration in 2020 issued an award in favor of the investors and entitled them to a claim of $99.8 million USD. However, the investors unanimously renounced their rights to collect the damages awarded.
The reason for the decision is believed to have been caused by the difficulty of the claimants distributing the damages equally among themselves.

Mercuria Energy Group Ltd. v. Poland, SCC

Case type: International Investment Agreement
Case No. 096/2008
Treaty: The Energy Charter Treaty (1994)
Section: SCC Awards, SCC Arbitration Rules
Outcome: Favor of the State

Case Summary

Claimant: Mercuria Energy Group Ltd.
Nationality: Cyprus
Respondent: Poland

Breaches alleged:

Fair and equitable treatment
Unreasonable or discriminatory measures
Indirect expropriation

Breaches found

No breach

Mercuria Energy Group Limited, the principal of the Polish-based company J&S Energy SA, filed an arbitral action against the State in 2008 and claimed a total payment of almost USD 400 million breaches of the Energy Charter Treaty. The claim arose because the State imposed a financial Section J&S Energy S.A. for not maintaining public stated fuel oil stocks.

The tribunal rejected the claim of the energy company under the SCC Rules, stating that Poland did not breach the provisions of Article 10(1) of the Energy Charter Treaty. In particular, the tribunal stated that the Republic of Poland (i) did not breach the obligation to accord fair and equitable treatment to Mercuria Energy Group Limited’s investment in Poland and (ii) did not discriminate against the investments of Mercuria Energy Group Limited in Poland.

The tribunal also ordered Mercuria to handle 75% of arbitration costs and reimburse the State all its costs, including experts’ costs, at the substantive phase of the arbitration. The award was issued in 2011.

Ioan Micula, Viorel Micula, S.C. European Food S.A, S.C. Starmill S.R.L. and S.C. Multipack S.R.L. v. Romania
Case type: International Investment Agreement

Case No: ARB/05/20

Treaty: Romania-Sweden BIT

Section: International Centre for Settlement of Investment Disputes (ICSID) Rules, International Centre for Settlement of Investment Disputes (ICSID) Awards

Outcome: favor of the investor
Summary of The Case
Country: Romania
Claimant: Ioan Micula, Viorel Micula, ….
Respondent: Russian Federation

IIA Breaches Alleged
Direct Expropriation

IIA Breaches Found

Direct Expropriation

At a time of economic unbalance in its State, Romania decided to implement certain economic measures that gave disfavoured regions economic incentives to improve and increase their development. Romania enacted the Emergency Government Ordinance 24/1998, which is known as the “EGO 24/1998” or “EGO 24”. The plan by the State was to maintain the law for 10 years. The law presented certain incentives on taxes and duties reduction so as to entice foreign investments to the target regions.

Due to these incentives, the claimants (Micula and others) established their business in the region and entered an agreement with the Romanian Government to maintain the implemented measures for at least 10 years. The parties reached the agreement and imbedded the Romania-Sweden BIT as the basis for dispute resolution.

The claimants who were of Swedish origins invested in Ştei-Nucet-
Drăgăneşti an impoverished region based in Bihor County, at northwest Romania. The claimants spent as much as 200 million Euros on machinery purchase and importation, raw materials, equipment lands, buildings, and food production facilities.

After several years of the claimants settling in Romania, the Government prematurely put a hold on the incentives before the agreed timeline and the claimants countered by activating the arbitration treaty.

The claimants argued the respondent breached the BIT by ending the incentives prematurely and, as such, has caused them damages and losses. Romania agreed that it stopped the incentives.

The tribunal ruled in favor of the investors and issued an award of 116,200,000 million dollars to the claimants as opposed to the initial claim of 832,900,000 million dollars. The final award was issued on December 11, 2013, 8 years after the case was first submitted in 2005.

The award was, however, not enforced following the European commission blocking the award. However, the United Kingdom Supreme court in 2020 ruled for the enforceability of the award to end a long dispute that lasted 15 years.

Conclusion

This article has successfully outlined some of the most famous international commercial arbitration cases to be successfully resolved to give readers an idea of how the system works and its leaning toward impartial and unbiased rulings.

Therefore, if you are looking to set a claim on a related international dispute or will need to respond, it is extremely important to know the treaty entered and its coverage extent. Usually, you would need the service of a major firm or arbitrator to advise and help you put out a favorable claim or defense.

While there are several arbitrators that you could consider, Rattaskuten is one of the most standout firms that you can call to help you put up a real case and have a chance of a favorable result. The firm specializes in offering services on Commercial Arbitration in Sweden and International investment cases. It also has some of the best and most equipped Arbitrators that are experienced in handling arbitration case.

About Rattsakuten

Rattsakuten is a leading law firm focused on Commercial Arbitration and Dispute Resolution. Based in Sweden, Rattsakuten handles dispute resolution and Arbitration matters before the SCC (Swedish Chamber of Commerce), ICC, HKIAC, and several other Arbitration tribunals.


Fredrik Jörgensen

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