Summary

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Case Report (free download)

Case Report by Arno Janssens and Tarunima Vijra

Summary

Iranian investors initiated PCA arbitration under the 2002 Iran-Bahrain BIT alleging several treaty breaches by Bahrain, including expropriation of a joint-venture bank located in Bahrain. The bank allegedly engaged in widespread violations of international sanctions imposed against Iranian entities by the UN Security Council, the United States, and the European Union. The alleged infringements also implicated Bahraini law. The Arbitral Tribunal refused to decline jurisdiction or declare Claimants' claims inadmissible, citing insufficient evidence of serious and widespread violations of fundamental norms of international law that bore a close relationship to the claims. On the merits, the Arbitral Tribunal found Bahrain's measures against the bank to be expropriatory in nature, politically motivated and lacking rational justification, rendering them unlawful and triggering compensation obligations under the BIT.

Main issues

(1) Jurisdiction over and admissibility of claims based on conduct allegedly violating the unclean hands doctrine and the international public order; (2) indirect expropriation as a result of alleged violations of domestic law and international sanctions.

Bank Melli Iran, Bank Saderat Iran v The Kingdom of Bahrain (PCA Case No. 2017-25) - Award - 9 November 2021

Case report provided by International Arbitration Case Law (IACL)

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