Summary

PCA CASE NO. 2018-45

IN THE MATTER OF AN ARBITRATION PURSUANT TO THE AGREEMENT BETWEEN THE GOVERNMENT OF THE CZECH REPUBLIC AND THE UNITED ARAB EMIRATES ON THE PROMOTION AND PROTECTION OF INVESTMENTS OF 23 NOVEMBER

BEFORE

A TRIBUNAL CONSTITUTED IN ACCORDANCE WITH THE ARBITRATION RULES OF THE UNITED NATIONS COMMISSION ON INTERNATIONAL TRADE LAW, 1976 (THE "UNCITRAL RULES")

AWARD

The Arbitral Tribunal
Sir Christopher Greenwood, GBE, CMG, QC (Presiding Arbitrator)

Mr Richard Wilmot-Smith QC
Professor Donald McRae CC, ONZM

2 March

TABLE OF CONTENTS

I. INTRODUCTION
A. The Parties
B. Background of the Dispute
C. The Arbitration Agreement
II. PROCEDURAL HISTORY
A. The Commencement of the Arbitration and Constitution of the Tribunal
B. Written Submissions and Document Production
C. Hearing Preparation and Postponement
D. The Introduction of Additional Evidence
E. The Parties' Skeleton Arguments and the Hearing
III. FACTUAL BACKGROUND
A. The Legal Context of the Claimant's Investment
B. The Claimant and its Business in the Czech Republic
C. Communications with the City of Prague and Subsequent Litigation
D. Alcor's Sale of Alcor CZ
IV. THE POSITIONS OF THE PARTIES
A. Jurisdiction and Admissibility
1. Whether the Claimant was an "Investor" at the Relevant Time
2. Whether the Claimant made an Investment
3. Whether the Claimant Structured Its Investment to Create Treaty Jurisdiction over a Foreseeable Dispute
4. Whether the Claimant Seeks "Supranational" Review of the Judgments of Czech Courts
5. Whether the Claimant is Pursuing Double Recovery
B. The Merits
1. Summary of the Claims
2. Fair and Equitable Treatment and Legitimate Expectations
3. Arbitrary or Bad Faith Conduct
4. Full Protection and Security
5. Discrimination
C. Quantum
D. Relief Requested
V. THE DECISION OF THE TRIBUNAL
A. Introduction
B. Applicable Law
C. Whether the Claimant was an Investor at the Relevant Time
1. The Date of Commencement of the Arbitration Proceedings
2. The Date at which Jurisdiction must Exist
3. The Effect of Sale of the Investment
VI. COSTS
VII. DISPOSITIF

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B. BACKGROUND OF THE DISPUTE

3. This arbitration concerns the Czech Republic's alleged breach of its obligations under Articles and 3 of the Agreement Between the Government of the Czech Republic and the Government of the United Arab Emirates for the Promotion and Protection of Investments dated 23 November 1994 (the "Treaty")1 with respect to the Claimant's alleged investment in a number of land plots upon which the City of Prague (the "City" or "Prague") maintains public roads and auxiliary communications

4. At the heart of this dispute is a disagreement about the Claimant's entitlement to, and the measure of compensation for, alleged unjust enrichment in respect of the City's use of land owned by the Claimant's former subsidiary, Alcor Holdings CZ. s.r.o. ("Alcor CZ"). The Claimant contends that the Treaty entitles it to compensation under a formula set out in a municipal regulation ("Resolution No. 2141"), adopted by the City, that determines how much rent the City can charge when leasing its own land for particular purposes to third parties. According to the Claimant, the same formula must be applied to cases in which the City operates structures such as roads and utilities on land belonging to a private party. The Claimant maintains that Alcor CZ was at all material times the owner of various plots of land in the City (the "Plots") on which the City had built and operated roads and other utilities.

5. The Respondent argues that this Tribunal lacks jurisdiction because the Claimant is not a covered "investor" and lacks a covered "investment" within the meaning of those terms in the Treaty. It also raises several other preliminary objections to the admissibility of the Claimant's claims (namely, that the Claimant structured its investment specifically to invoke Treaty jurisdiction, that the Claimant seeks supranational review of Czech court judgments, and that the Claimant is pursuing multiple recovery). With regard to the merits, the Respondent submits that, pursuant to a judgment issued by a Czech court (and subsequently upheld upon appeal at all levels of the judicial system), the City has already paid compensation to Alcor CZ in the amount required under Czech law. It disputes the claim that the formula to be used in such a case is that contained in Resolution No. 2141 and maintains that its conduct has involved no breach of the Treaty.

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VII. DISPOSITIF

293. For the reasons given above the Tribunal DECIDES:

(a) That it has no jurisdiction to entertain the Claimant's claim;

(b) That the Claimant shall bear the costs of the Tribunal and the PCA and shall therefore pay to the Respondent the sum of EUR 146,267.97;

(c) That the Claimant shall pay to the Respondent the sum of EUR 637,225 in respect of the latter's costs of legal representation;

(d) That the Claimant shall make the payments required in sub-paragraphs (2) and (3) within sixty days of the date of this Award, after which any amount outstanding will incur interest at the rate of 6% per annum compounded twice yearly until full payment has been made.