Edmond Khudyan and Arin Capital & Investment Corp. v. Republic of Armenia
ICSID · Investment (ICSID and treaty) · Armenia · 15 Dec 2021
Why it matters
This case is notable for its detailed analysis of the 'contribution to the host state's development' prong of the Salini test for jurisdiction ratione materiae under ICSID. The Tribunal found that a luxury apartment development that did not pay taxes and was not completed did not contribute to Armenia's development, thus failing the investment definition. It also addressed the nationality requirement for dual nationals under the ICSID Convention, finding that Mr. Khudyan, a dual US-Armenian citizen, could not bring a claim against Armenia because he was also a national of the respondent state.
Summary
The case involved a dispute between US nationals (Mr. Edmond Khudyan and Arin Capital & Investment Corp.) and the Republic of Armenia concerning an alleged investment in a luxury apartment development in Yerevan. The Claimants alleged that Armenia failed to protect their investment from a criminal scheme that siphoned off assets. The Tribunal first addressed jurisdiction ratione personae. It found that Mr. Khudyan, a dual US-Armenian national, was not a 'national of another Contracting State' under Article 25(2)(a) of the ICSID Convention because he also held Armenian nationality. Therefore, the Tribunal lacked jurisdiction over his claims. For Arin Capital & Investment Corp. (Arin US), the Tribunal found it had jurisdiction ratione personae because it was a US corporation. However, the Tribunal then examined jurisdiction ratione materiae, whether Arin US had made an 'investment' under the BIT and ICSID Convention. Applying the Salini test, the Tribunal considered whether the alleged investment involved a contribution, a certain duration, risk, and contribution to the host state's development. The Tribunal found that the project was not completed, no taxes were paid, and the development did not contribute to Armenia's economic development. Therefore, the Tribunal lacked jurisdiction ratione materiae over Arin US's claims. The Tribunal dismissed all claims and ordered the Claimants to pay costs.
The detail
Parties: Edmond Khudyan and Arin Capital & Investment Corp. v. Republic of Armenia
Case number: ICSID Case No. ARB/17/36
Outcome: The Tribunal dismissed all claims for lack of jurisdiction and ordered Claimants to pay Respondent USD 337,466.34 for advances and USD 400,000 towards legal fees.
Applicable law: Treaty between the United States of America and the Republic of Armenia Concerning the Reciprocal Encouragement and Protection of Investment (1992 BIT); ICSID Convention
Issues in play: The Tribunal examined whether Claimants had made an 'investment' under the BIT and ICSID Convention, and whether Mr. Khudyan was a protected investor. The key collision was between the broad definition of investment in the BIT and the requirement under ICSID that an investment contribute to the host state's development.
Read the full decision at italaw ↗
Locus Standi links to the source decision and publishes its own plain-language summary. It does not reproduce the text of the award.