Category Archives: Okategoriserade

Case Summary No. 8



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.


SCC seminar on ISDS & TTIP at the European Parliament

isdsbloggbrysselThe Stockholm Chamber of Commerce took an initiative to organize a seminar on ISDS at the European Parliament on 5 May 2015. The aim was to discuss the importance of the mechanism in support of the global economy – with a special focus on the Transatlantic Trade and Investment Partnership (TTIP).

Participants came from the Members of the European Parliament offices, governments’ representatives including the European Commission and different NGOs. The panel consisted of experts from different backgrounds and was moderated by Andreas Hatzigeorgiou, Chief Economist at the Stockholm Chamber of Commerce.

ISDS comes in the form of international arbitration and it is therefore essential to understand how the mechanism has been used. Annette Magnusson, the Secretary General of the Arbitration Institute of Stockholm Chamber of Commerce explained that historically, arbitration served as a neutral dispute resolution venue in times of geopolitical crisis, among others during the fall of the Soviet and Iran-U.S crisis. Today, ISDS plays an even more important role. In recent years, investors in the renewable energy sector have used ISDS to enforce investment protections in IIAs. This demonstrates that ISDS has the potential to protect investment in sustainable development efforts.

Rikard Wikström, a partner at White & Case in Stockholm, explained that rule of law and legal principles underpin ISDS as a procedural mechanism. The disputing parties in ISDS have equal rights to present their case, arguments are made based on the law and due process should exist throughout the process.

ISDS reform is underway, among others by the adoption of international rules to enhance transparency in ISDS proceedings. Timothy Lemay, the Principal Legal Officer of the United Nations Commission on International Trade Law (UNCITRAL) explained how the UNCITRAL Transparency Rules work in practice. By the application of these rules, most documents in an ISDS proceeding will be made public, the public will be able to access the hearings through video-streaming and participate in the proceedings by submitting amicus curiae.

Turning to the question of ISDS in the TTIP, Christofer Fjellner, a Member of the European Parliament, emphasized that having investment protection in the TTIP is a matter of rule of law. It is a matter of ensuring that foreign property will not be expropriated without fair compensation and that investors are treated without discrimination. ISDS is just a mechanism to enforce this protection.

Finally, Freya Baetens, associate law professor of the Leiden University, conducted a cost-benefit analysis of including ISDS in the TTIP. She concluded that the TTIP may benefit from some improvements in the ISDS system, among others by invoking a loser-pays principle and ensuring that frivolous claims are dismissed at an early stage of the proceedings.

Above all, ISDS in the form of international arbitration is a well-established mechanism to resolve international disputes. It is governed by both international law and domestic law – which means that States maintain full control in the functioning of the system.