C. THE DISPUTE
5. The Claimant alleges that the Respondent, by its acts and omissions, breached various provisions of the Agreement between the Government of the Kingdom of the Netherlands and the Government of the Czech and Slovak Republic (together, the “Contracting States”) on encouragement and reciprocal protection of investments, signed on 29 April 1991 and entered into force on 1 October 1992 (the “Treaty”). 1 In 1992, the Czech Republic succeeded to the Czechoslovak Republic, in respect of the Treaty. The Czech Republic has been recognized by the Kingdom of the Netherlands as an independent sovereign State as of 1 January 1993.
6. The Claimant requests, among other things, damages provisionally quantified at CZK 2,438,178,229.
7. According to the Claimant, between 2007 and 2011, it invested over CZK 3 billion in the form of loans into the Czech Republic, to finance in particular the purchase of poppy seed. These loans were granted pursuant to an agreement with three individuals who had approached the Claimant with a business opportunity in the poppy seed market.
8. According to the Claimant, however, a majority of these loans was not reimbursed, as the business opportunity was revealed to be a fraud, implemented by those individuals who had approached the Claimant. Consequently, the Claimant filed criminal complaints in 2012.
9. On 25 January 2017, the Czech courts issued a first instance judgment condemning the three individuals who had approached the Claimant. This judgment was confirmed on 9 November 2017 by the High Court in Prague.
10. The Claimant contends that the five-year delay between its criminal complaint and the issuance of the judgments represents an “unreasonable delay [… that] reduced the chance that (any of) the funds invested by Fynerdale could be recovered.” 5 In comparison, it claims that the same sort of facts were dealt with in a much speedier fashion in an almost identical case where the victim was a Czech company. 6 The Claimant thus argues that the Czech Republic breached its obligations under the Treaty.
11. The Respondent in response considers that the Tribunal has no jurisdiction over the claims, because (i) there is no valid arbitration agreement following the accession of the Czech Republic to the European Union (the “EU”), as shown and confirmed by the decision of the Court of Justice of the European Union (the “Court of Justice” or “CJEU”) in the case Slovak Republic v. Achmea B.V. (Case C-284/16) (the “Achmea Judgment”) and (ii) the investment was made in breach of Czech law, as evidenced by a judgment of the Swiss Supreme Court convicting inter alia the Claimant’s ultimate beneficial owners for fraud. In any event, the Respondent argues, the Claimant’s case is without merit.
For the reasons set out above, the Tribunal,
1. Unanimously, rejects the Respondent’s objection that that the Tribunal lacks jurisdiction over the present dispute on the basis that the arbitration agreement contained in Treaty is incompatible with European law and thus invalid;
2. By majority, finds that the Tribunal does not have jurisdiction over the present dispute on the basis that the legality of the investment is not established;
3. Unanimously, reserves its decision on costs for an award on costs, to be issued after the receipt of costs submissions from the Parties.