Alcor Holdings Ltd. v. The Czech Republic
PCA · Investment (ICSID and treaty) · Czech Republic · 2 Mar 2022
Why it matters
This case clarifies the temporal requirement for investor status under the Czech Republic-UAE BIT, applying the Aven principle that a claimant must own the investment at the time of the alleged breach and at the time the arbitration is commenced. It confirms that selling the investment before initiating arbitration, even if the dispute arose earlier, can deprive the tribunal of jurisdiction unless special circumstances exist.
Summary
Alcor Holdings Ltd., a UAE company, owned a Czech subsidiary (Alcor CZ) that held land plots in Prague on which the City of Prague had built roads and utilities. Alcor claimed that the City's use of the land without adequate compensation violated the Czech Republic-UAE BIT. The dispute centered on the proper compensation formula under a municipal resolution. However, before initiating arbitration, Alcor sold its shares in Alcor CZ to a third party, Mizar Limited, in 2016. The Czech Republic objected to jurisdiction, arguing that Alcor was not an 'investor' under the BIT because it no longer owned the investment when it commenced arbitration in 2018. The Tribunal applied the principle from Aven v. Costa Rica, which holds that an investor must own the investment at the time of the alleged breach and at the time the arbitration is commenced. Since Alcor sold its investment before commencing arbitration, it lost its standing as an investor. The Tribunal found no special circumstances to justify an exception, as the sale was not forced and Alcor did not retain any interest in the investment. Consequently, the Tribunal upheld the jurisdictional objection and dismissed the claim without addressing the merits or quantum. The Tribunal ordered Alcor to bear all arbitration costs and reimburse the Czech Republic's legal costs.
The detail
Parties: Alcor Holdings Ltd. v. The Czech Republic
Case number: PCA Case No. 2018-45
Outcome: The Tribunal upheld the Respondent's jurisdictional objection, finding it had no jurisdiction. Claimant ordered to pay Respondent's costs.
Applicable law: Agreement Between the Government of the Czech Republic and the Government of the United Arab Emirates for the Promotion and Protection of Investments (1994); UNCITRAL Arbitration Rules (1976)
Issues in play: The case involved the definition of 'investor' under the BIT and whether the claimant retained investor status after selling its investment. The Aven principle on loss of investor status was central.
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