Magyar Farming Company Ltd - Kintyre Kft and Inicia Zrt v Hungary ICSID Case No. ARB/17/27 - Decision on annulment - excerpts - 16 November 2021
Country
Year
2021
Summary
Source: icsid.worldbank.org
Annulment Proceeding - DECISION ON ANNULMENT
Members of the ad hoc Committee
Prof. Geneviève Bastid Burdeau, President
Mr. Manuel Conthe
Mr. Michael Nolan
Date of dispatch to the Parties: November 16, 2021
I. INTRODUCTION AND PARTIES
II. PROCEDURAL HISTORY
III. SUMMARY OF THE AWARD
IV. THE SCOPE OF ANNULMENT PROCEEDINGS IN GENERAL
A. The Parties' Positions
(1) Hungary's Position
(2) The Claimants' Position
B. The Committee's Analysis
V. THE GROUNDS FOR ANNULMENT ASSERTED BY HUNGARY
A. Manifest Excess of Power by the Tribunal
(1) The Parties' Positions
a. Hungary's Position
b. The Claimants' Position
(2) The Committee's Analysis
a. Jurisdiction
b. Mitigation
B. Failure to State the Reasons on which the Award is Based
(1) The Parties' Positions
a. Hungary's Position
b. The Claimants' Position
(2) The Committee's Analysis
VI. COSTS
A. The Parties' Positions
(1) Hungary's Costs Submissions
(2) The Claimants' Costs Submissions
B. The Committee's Decision on Costs
VII. DECISION
INTRODUCTION AND PARTIES
1. This annulment concerns an application for annulment of the award rendered on November 13, 2019 between Magyar Farming Company Limited, Kintyre Kft and Inícia Zrt and Hungary (ICSID Case No. ARB/17/27) (the "Award") by a tribunal composed of Prof. Gabrielle Kaufmann-Kohler, as President, Dr. Stanimir A. Alexandrov and Dr. Inka Hanefeld (the "Tribunal").
2. The Application for annulment was filed by Hungary (the "Respondent" or the "Applicant") against Magyar Farming Company Limited, Kintyre Kft and Inícia Zrt (the "Claimants"). The Claimants and the Respondent are collectively referred to as the "Parties". The Parties' representatives and their addresses are listed above on page (i).
3. The Award decided a dispute submitted to the International Centre for Settlement of Investment Disputes ("ICSID" or the "Centre") on the basis of the Agreement between the United Kingdom of Great Britain and Northern Ireland and the Hungarian People's Republic for the Promotion and Reciprocal Protection of Investments, dated March 9, 1987 (the "BIT" or "Treaty") 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").
4. As described in the Award, the dispute in the original proceeding related to Hungary's measures regulating possession and disposal of State-owned agricultural land, which, according to the Claimants, resulted in the expropriation of their leasehold rights to 760 hectares of State-owned land located in Hungary's North-Western region of Ikrény (the "Land") and in a diminution of the value of their farming business in Hungary1.
5. In the Award, the Tribunal found that (i) it had jurisdiction over the dispute; (ii) the Respondent breached Article 6(1) of the BIT by expropriating the Claimants' investment without compensation; (iii) the Respondent should pay EUR 7,148,824 (plus interest) as compensation for expropriation and reimburse the Claimants for the costs of arbitration and their legal costs (plus interest)2.
6. The Respondent applied for annulment of the Award on the basis of Article 52(1) of the ICSID Convention, identifying three grounds for annulment: (i) manifest excess of powers (Article 52(1)(b))3; (ii) serious departure from a fundamental rule of procedure (Article 52(1)(d))4; and (iii) the Award has failed to state the reasons on which it is based (Article 52(1)(e))5.
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DECISION
142. For the reasons set forth above, the ad hoc Committee decides as follows:
(1) Hungary's Application for Annulment is dismissed in its entirety;
(2) The stay of enforcement of the Award, decided by the Committee on September 11, 2020, is terminated.
(3) Hungary shall bear the costs of the annulment proceeding, including the fees and expenses of the Members of the Committee.
(4) Hungary shall reimburse the Claimants GBP 210,000 and EUR 95,250 for their legal costs and expenses in the annulment proceeding.
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