International Arbitration Newsletter - October 2020 | Regional Overview: Europe

ALBANIA

Albania facing investment treaty claim over the seizure of port terminal

US’s Metal Commodities Trade Corp and UK’s Altberg Developments, both shareholders of Durres Container Terminal (an Albanian joint venture used as a vehicle to exploit the Durres port concession granted by Albania), have filed a €100 million ICSID claim against Albania after an Albanian court decided to terminate the contract and ordered the seizure of the port terminal. The claim includes a series of interim measures to prevent further expropriating action.

The investors claim that Albanian authorities have continuously hampered their efforts to modernized and make the terminal profitable by accusing the joint venture of several defaults. They also claim that the decision of the Albanian government to divert shipments and oil trade to other ports in order to transform Durres port into a tourist attraction is as a flagrant violation of the BIT’s provision on expropriation and fair treatment.

ENGLAND AND WALES

Wales wins a roadworks claim against British contractor

A sole arbitrator has found in favour of the Welsh government and against British construction company, Costain Group, in relation to a £223 million road expansion scheme in South Wales. The project resulted in cost overruns of £117 million for which the tribunal held Costain Group liable. The arbitration procedure governed by both the Arbitration Procedure of the UK’s Institution of Civil Engineers and the Arbitration Act 1996.

Estonia

Kosovo faces fintechclaim

LuteCredit, an Estonian credit and fintech company, has filed an ICC claim against Kosovo alleging that Kosovo had breached the foreign investment law and claiming that Kosovo had engaged in unlawful expropriation procedures. Lutecredit has been operating in Kosovo since 2017 through a subsidiary called LuteCredit Kosovo (LCK). Last year, the National Bank of Kosovo revoked LCK’s licence, alleging that the entity’s operations violated the terms of said licence, in particular regarding the interests rates charged.

RUSSIA

Claim brought by Russian bank to be heard by a LCIA tribunal

London’s Commercial Court granted an injunction requested by Riverrock, an investment fund, against the International Bank of St Petersburg (IBSP), prohibiting the prosecution of the proceedings in St Petersburg and concluding that the dispute had to be conducted in a LCIA arbitration procedure.

This dispute stems from nine securities contracts signed by IBSP and Riverrock, each worth US $15 million. Said agreements, in which Riverrock sold securities to IBSP that were issued by UBS, included LCIA arbitration clauses and were subject to English law.

In 2018, the central Bank of Russia revoked IBSP’s license, triggering the insolvency of the entity. For its part, Riverrock verified the default and UBS informed IBSP the transference of the associated loans to its London branch.

In this context, IBSP filed a lawsuit against Riverrock before the Arbitration Court at St Petersburg, alleging that the contracts were designed to harm the creditors and asking for the repayment of all amounts paid to Riverrock, estimated in US$ 140 million.

In turn, Riverrock sought relief in its anti-suit petition filed with the London Commercial Court, contending that IBSP’s suit in St. Petersburg was in breach of the arbitration clause contained in the securities contracts.

Ukraine

Ukraine loses satellite claim against Canadian contractor 

In 2010, Ukrkosmos, the Ukrainian State Space Agency, awarded Macdonald Dettwiler and Associates (MDA), a Canadian space technology company, a US$ 254 million contract for the construction and launch of Ukraine’s first geostationary satellite, as well as the construction of the necessary infrastructure to launch and maintain the satellite.

In 2014, MDA decided to stop the construction works, claiming force majeure due to the Russian’s annexation of the Crimean peninsula, where the works were taking place. MDA, unable to continue the construction, withdrew from the project.

In 2018, Ukrkosmos filed an UNCITRAL claim against the Canadian constructor challenging the alleged force majeure defence and asking for the repayment of US$ 227 million.

In a recent decision, the London-seated UNCITRAL tribunal dismissed the claim and ordered Ukrkosmos to bear all arbitration costs, on the grounds that the investigation carried out by the Ukrainian Anti-Corruption Bureau had discovered a corruption scheme –led by the Ukrainian director of the project– aimed to misappropriate construction funds that had been acquired through a loan granted by Canada’s export credit agency.