Case Summary No. 8

 

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Our next case summary is Parkerings-Compagniet AS v. Republic of Lithuania. The summary is based on the facts as described in the award rendered by the arbitral tribunal in August 2007.

Parkerings-Compagniet AS (“Parkering”) is a Norwegian corporation with principal business activity consists in the development and operation of parking facilities. Parkering wholly owns Baltijos Parkingas (“BP”), a Lithuanian subsidiary.

BP entered into an agreement with Vilnius Municipality to construct and operate car parks in the city. The city rejected BP’s proposed project on the Gedimino site because the project was situated in the Old Town, a culturally protected area designated by the UNESCO. However, according to Parkering, the city authorized another investor, a Dutch company, to build parking facilities in the Old Town.

Parkering brought a claim under Norway-Lithuania BIT. It claimed, among other things, that it was treated less favourably than the Dutch investor, a violation of most-favoured nation treatment (MFN) clause.

According to the tribunal, the essential condition of a violation of MFN clause is the existence of a different treatment accorded to another investor in a similar situation. However, the situation of the two investors will not be similar if the different treatment is justified.

The tribunal found that Parkering and the Dutch investor were not in similar situation. Even though both projects were located in Old Town, BP’s project extended significantly more into the Old Town near the culturally sensitive area of the Cathedral. This was not the case with the Dutch investor’s project.

The tribunal reasoned that the refusal of BP’s project was justified by historical and archaeological conservation and environmental protection reasons. It went on to say that refusal of one site did not deprive the investor of the possibility to propose other locations.

The tribunal rejected other claims by Parkering in their entirety.