Dirk Herzig as Insolvency Administrator over the Assets of Unionmatex Industrieanlagen GmbH v. Turkmenistan
ICSID · Investment (ICSID and treaty) · Turkmenistan · 9 Jan 2024
Why it matters
This case is notable for the tribunal's rejection of the vast majority of a EUR 46 million investment claim, awarding only 5% of the damages sought. It underscores the high threshold for establishing breaches of FET and expropriation standards under the Germany-Turkmenistan BIT, and the limited scope of umbrella clauses. The decision also clarifies that a state is not liable for a company's insolvency absent direct state interference.
Summary
The case arises from several failed grain mill construction projects in Turkmenistan. Unionmatex Industrieanlagen GmbH, a German company, invested in these projects and later became insolvent. Dirk Herzig, as insolvency administrator, brought a claim under the Germany-Turkmenistan BIT, seeking EUR 46 million in damages. He alleged that Turkmenistan violated the BIT by failing to provide fair and equitable treatment, expropriating the investment, and breaching the umbrella clause. The tribunal, composed of Lucy Reed (President), Philippe Sands, and Nathalie Voser, rejected all claims except a small portion under Article 2(2) of the BIT, which provides for fair and equitable treatment. The tribunal found that Turkmenistan did not commit expropriation or breach the umbrella clause, and that the state was not responsible for Unionmatex's insolvency. The award granted EUR 2.5 million, representing 5% of the amount claimed. Each party was ordered to bear its own costs. The decision was published on 9 January 2024.
The detail
Parties: Dirk Herzig as Insolvency Administrator over the Assets of Unionmatex Industrieanlagen GmbH v. Turkmenistan
Case number: ICSID Case No. ARB/18/35
Outcome: Turkmenistan prevailed on most claims; claimant awarded EUR 2.5 million (5% of EUR 46 million sought) for a limited breach of Article 2(2) of the BIT; each party bears its own costs.
Quantum: EUR 2.5 million
Applicable law: Germany-Turkmenistan Bilateral Investment Treaty (BIT); ICSID Convention; international law
Issues in play: Fair and equitable treatment, expropriation, and umbrella clause under the BIT; the tribunal assessed whether Turkmenistan's actions breached these standards in relation to failed grain mill construction projects.
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