Reproduced from www.worldbank.org/icsid with permission of ICSID.
TABLE OF CONTENTS
I. Introduction and Parties
II. Procedural Background
III. The Parties' Written and Oral Submissions
A. The Respondent's Inter-State Negotiation Objection
B. The Claimant's Opposition to the Inter-State Negotiation Objection
IV. The Tribunal's Analysis
A. Article 9 and Inter-State Negotiation
B. Admissibility or Jurisdiction
C. What Must be Done to Satisfy the Inter-State Negotiation Precondition?
D. Compliance with the Inter-State Negotiation Precondition
I. INTRODUCTION AND PARTIES
1. This case concerns a dispute submitted to the International Centre for Settlement of Investment Disputes ("ICSID" or the "Centre") on the basis of the Agreement between the Government of Georgia and the Government of the Republic of Azerbaijan on the Encouragement and Reciprocal Protection of Investments, which entered into force on July 10, 1996 (the "Azerbaijan-Georgia BIT" or the "BIT"), and the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, which entered into force on October 14, 1966 (the "ICSID Convention").
2. The claimant is Mr. Nasib Hasanov ("Mr. Hasanov" or the "Claimant"), a natural person having the nationality of Azerbaijan.
3. The respondent is Georgia ("Respondent" or "State" or "Georgia").
4. The Claimant and the Respondent are collectively referred to as the "Parties." The Parties' representatives and their addresses are listed above on page (i).
5. This Decision addresses the Respondent's objection to jurisdiction on the basis that the Claimant failed to satisfy the requirements of Articles 9(1) and (2) of the BIT, which, the Respondent argues, "conditions resort to international arbitration on prior negotiations between" the Georgian and Azerbaijani Governments, and the Claimant did not seek or initiate such negotiations (the "Inter-State Negotiation Objection")
6. The underlying dispute in this arbitration concerns the Claimant's status as the ultimate beneficial owner of Caucasus Online LLC ("CO"), a telecommunications company formed under the laws of Georgia. The Claimant explains that he "made and acquired his investment in CO" in January 2019 (the "Transaction").
According to the Claimant, CO is the sole owner of a submarine, fibre-optic cable under the Black Sea, by which it "transits internet traffic from Europe to the South Caucasus and Caspian region." The Georgian National Communications Commission ("GNCC"), a State administrative agency, authorizes CO's operations
7. The Claimant's position is that GNCC has (a) arbitrarily and illegitimately asserted a right to control and veto the Transaction by which Mr. Hasanov attained his CO beneficial ownership status; and (b) wrongfully taken retaliatory measures when the Claimant "insisted that the Transaction was unconstrained by the GNCC's overreaching attempt to regulate." The Claimant contends, in short, that the GNCC did not have the power to oblige CO to obtain the GNCC's "prior consent to any future change in the beneficial ownership of CO (rather than just for a change in direct shareholdings in CO, as required by the Communications Law)."3 Nonetheless, he and the "Seller" in the Transaction (Mr. Khvicha Makatsaria) kept the GNCC and the Georgian Government "fully informed of the potential change in beneficial ownership of CO."4
8. The Respondent's position in the underlying dispute is that the Claimant has attempted, "in plain defiance of the applicable admission requirements, to invest in and take over a company that has a dominant market position in a highly regulated industry and owns strategic infrastructure." The Respondent explains that "Georgian law requires notification to and prior approval by the" GNCC "of any proposed investment in a telecommunications company authorized by the GNCC that would result in a transfer, direct or indirect, of five percent or more of the ownership in the company." This notification requirement applies to CO, but the Claimant "never sought" the GNCC's prior approval "for any of the transactions that purported to transfer to him a 100 percent indirect, beneficial interest in CO."
Instead, the Claimant concealed this acquisition from the Georgian authorities
9. According to the Respondent, Mr. Hasanov willfully defied the GNCC's orders to comply with the law, which prompted the GNCC to issue administrative proceedings and an instruction to CO to eliminate its ownership violation.
However, the violation remained and the Claimant "continued to unlawfully interfere with CO's management." The GNCC therefore appointed a "special manager" for CO, pursuant to the Communications Law, on October 1, 2020, rather than suspend CO's authorization to operate. The latter option would have carried the risk of harming the economic interests of the State, as well as the "legitimate interests of authorized persons/licensees in the field of electronic communications, the consumers or the competitive environment in the market."6
10. The Parties' underlying dispute is briefly described by way of background. The issue that this Decision addresses, as identified above, is the Respondent's Inter-State Negotiation Objection. The Tribunal, per its previous ruling,7 considers this objection as a preliminary question.8 The Respondent contends that the Inter-State Negotiation Objection, if successful, would dispose of the entire case.9 The Claimant's position is that even if the objection were successful, it would not dispose of the entire case or of any of the Claimant's claims, because the Claimant would, "in line with an extensive line of jurisprudence, simply seek a stay of the proceedings and would make renewed attempts to initiate interstate negotiations before pursing the same claims with the same scope."10
115. For the reasons set forth above, the Tribunal decides as follows:
(1) The Respondent's Inter-State Negotiation Objection is dismissed.
(2) On the question of costs, the Tribunal previously informed the Parties (November 26, 2021; see above, para. 38) that, consistent with the Parties' suggestion (May 3, 2021) and para. 22.2 of Procedural Order No. 1, the Tribunal will confer with the Parties regarding the date for costs submissions (limited to two pages of argument together with a summary of cots incurred).
J. William Rowley