Almasryia for Operating & Maintaining Touristic Construction Co. L.L.C. v. State of Kuwait
ICSID · Investment (ICSID and treaty) · Kuwait · 1 Nov 2019
Why it matters
This case illustrates the high threshold for ICSID Rule 41(5) preliminary objections, confirming that claims can be dismissed at an early stage if they are 'manifestly without legal merit.' It also underscores the importance of complying with BIT procedural prerequisites (e.g., amicable settlement periods) and the need for investors to establish property rights under host state law before bringing expropriation claims.
Summary
Almasryia, an Egyptian company, invested in a joint venture to develop land in Kuwait's Wafra region. It claimed to have purchased a 5% interest in the land from a Kuwaiti national, Mr. Al-Otaibi, for $20 million. However, Mr. Al-Otaibi could not obtain a deed of ownership from Kuwaiti authorities. Almasryia alleged that Kuwait's failure to recognize the title violated the Egypt-Kuwait BIT, specifically Articles 6 (fair and equitable treatment) and 7 (expropriation). Kuwait filed a preliminary objection under ICSID Arbitration Rule 41(5), arguing the claims were manifestly without legal merit. The Tribunal first found the objection timely, filed within 30 days of the Tribunal's constitution. Applying the 'manifestly without legal merit' standard, the Tribunal held that Almasryia had not complied with Article 10(2) of the BIT, which requires a six-month amicable settlement period before arbitration. The Claimant had not initiated any such attempt. Additionally, the expropriation claim failed because Almasryia could not show it held a property right under Kuwaiti law. Under Kuwait's Real-estate Registration Law, ownership of land is only effective upon registration. The Claimant had no registered title; its only basis was a private joint venture agreement and a Saudi deed in favor of Mr. Al-Otaibi, neither of which was recognized by Kuwait. The Tribunal concluded that the claims were manifestly without legal merit and dismissed them. It ordered Almasryia to bear all arbitration costs and reimburse Kuwait's legal fees. The award was adopted by a majority, with one arbitrator dissenting.
The detail
Parties: Almasryia for Operating & Maintaining Touristic Construction Co. L.L.C. v. State of Kuwait
Case number: ICSID Case No. ARB/18/2
Outcome: Kuwait's preliminary objection upheld; claims dismissed as manifestly without legal merit; Claimant ordered to pay Respondent US$200,000 in arbitration costs and US$612,986.39 in legal costs.
Applicable law: Egypt-Kuwait BIT (2001); ICSID Convention; ICSID Arbitration Rules; Kuwaiti Real-estate Registration Law
Issues in play: The BIT's procedural requirement under Article 10(2) to attempt amicable settlement before arbitration collided with the Claimant's failure to do so. Also, the expropriation claim under Article 7 required a property right under Kuwaiti law, which the Claimant lacked because the land was not registered.
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