Accession Mezzanine Capital L.P. and Danubius Kereskedöház Vagyonkezelö Zrt. v. Hungary
ICSID · Investment (ICSID and treaty) · Hungary · 17 Apr 2015
Why it matters
This case is significant for its analysis of what constitutes an 'investment' in the context of broadcasting licences and regulatory tender processes. The tribunal clarified that rights arising from a broadcasting agreement and related tender rules can qualify as protected investments under a BIT, even if the licence itself is not renewed. It also addressed the interplay between domestic law and treaty definitions of investment, and the importance of the 'as early as possible' requirement for jurisdictional objections under ICSID Arbitration Rule 41(1).
Summary
The case concerns a dispute under the UK-Hungary Bilateral Investment Treaty (BIT) regarding the alleged expropriation of the claimants' investment in a Hungarian radio broadcasting company, Danubius Rádió. The claimants, Accession Mezzanine Capital L.P. (a Bermuda partnership) and Danubius Kereskedöház Vagyonkezelö Zrt. (a Hungarian company), owned shares in Danubius Rádió, which held a nationwide FM radio broadcasting licence granted in 1997. In 2009, Hungary conducted a new tender for the frequency, and Danubius Rádió lost its licence to a competitor. The claimants alleged that Hungary, through its broadcasting regulator ORTT, unlawfully expropriated their investment by failing to apply an 'incumbent preference' rule that should have favoured Danubius Rádió in the tender. Hungary objected to the tribunal's jurisdiction, arguing that the claimants did not have a qualifying 'investment' under the BIT because their rights were merely contractual and regulatory, not property rights. The tribunal bifurcated the proceedings, first ruling on jurisdiction. In its Award on Jurisdiction, the tribunal rejected Hungary's objections, finding that the claimants' rights under the Broadcasting Agreement and the tender rules (including the alleged incumbent preference) could constitute an 'investment' under the BIT. The tribunal applied the UK-Hungary BIT, the ICSID Convention, Hungarian Media Law, and customary international law. It held that the existence of an investment must be determined by reference to both domestic law and the BIT, and that the claimants had made a contribution, had a certain duration, and assumed risk, satisfying the Salini criteria. The tribunal also addressed the timeliness of Hungary's jurisdictional objections under ICSID Arbitration Rule 41(1), noting that the objections could have been raised earlier but deciding to bifurcate nonetheless, with costs to be addressed later. The case then proceeded to the merits phase.
The detail
Parties: Accession Mezzanine Capital L.P. and Danubius Kereskedöház Vagyonkezelö Zrt. v. Hungary
Case number: ICSID Case No. ARB/12/3
Outcome: The Tribunal upheld its jurisdiction over the expropriation claim under the UK-Hungary BIT, rejecting Hungary's objections that the claimants lacked a qualifying investment. The case proceeded to the merits phase.
Applicable law: UK-Hungary BIT (1987); ICSID Convention; Hungarian Media Law (Act I of 1996); General Terms of Tender (GTT); customary international law on expropriation
Issues in play: The collision was between Hungary's regulatory framework for broadcasting tenders (Media Law and GTT) and the BIT's protection of investments, specifically whether the claimants' rights under the Broadcasting Agreement and the alleged incumbent preference constituted an 'investment' under the BIT.
Read the full decision at italaw ↗
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