ICSID, 1 May 2018, Central European Aluminium Company (CEAC ) v. Montenegro, no. ARB/14/8, Decision on Annulment

Upon the request of the investor in the Central European Aluminium Company (“CEAC”) v. Montenegro case, on 1 May 2018 an ICSID ad hoc Committee issued a decision on annulment of an arbitral award dated 26 July 2016. In that award, the arbitral tribunal had declined its ratione personae jurisdiction over the dispute. In particular, he had found that Claimant had not fulfilled the nationality requirements under the BIT because CEAC did not have a seat in Cyprus. According to Claimant, neither the BIT nor the international law precisely defined the meaning of the seat. Thus, the investor had requested annulment on three grounds specified in Article 52 of the ICSID Convention. It had argued that the arbitral tribunal had manifestly exceeded its powers, had seriously departed from a fundamental rule of procedure and had failed to state in the award the reasons on which it was based. The investor developed eleven arguments with regard to its complaints on the above-mentioned grounds provided for in Article 52.

Once the general guidelines relating to a nature of annulment proceedings and to its grounds as invoked by the foreign investor had been recalled, the ad hoc Committee rejected all the claims submitted by CEAC. First, the ad hoc Committee considers the grounds for annulment as a whole. It highlights that the issue before the arbitral tribunal has not been the meaning of the seat under the BIT but an establishment of the existence of the CEAC’s seat in Cyprus at the relevant date. A judicial economy cannot be interpreted as a failure of the arbitral tribunal to apply international law regarding the notion of the seat. Moreover, the ad hoc Committee emphasizes that the chain of the arbitral tribunal’s reasoning is easily discernible and therefore, the ground of the failure to state reasons on which the award is based is ill-founded. Second, it turns to the alleged manifest excess of powers of the arbitral tribunal based on nine of eleven arguments of the claimant. The ad hoc Committee rejects all the arguments, noting that some of them overlap. Third, it examines six arguments developed in connection with the allegation of a serious breach of a fundamental rule of procedure, mainly concerning the treatment of evidence. According to the ad hoc Committee, such a treatment cannot be considered as ‘frivolous’ or ‘arbitrary’. Fourth, it recalls that the threshold for challenging an award for a failure to state reasons is a high one. In this case, the investor fails to meet it. Finally, the ad hoc Committee concludes that the investor shall assume all the costs of arbitration suffered by the both parties under the annulment proceedings, as well as all the costs of legal representation.

2018-06-27T21:21:29+00:00 May 1st, 2018|ICSID, International awards|0 Comments

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