Eugene Kazmin v. Republic of Latvia
ICSID · Investment (ICSID and treaty) · Latvia · 24 Mar 2021
Why it matters
This case is notable for the tribunal's decision to award full costs to the respondent despite the absence of a merits decision, based on the claimant's failure to comply with a security for costs order. It underscores the consequences of non-compliance with procedural orders in investment arbitration and the tribunal's discretion to allocate costs even when proceedings are discontinued without prejudice.
Summary
The dispute arose from Mr. Kazmin's acquisition of a steel mill in Latvia in 2014. He alleged that Latvia misrepresented the plant's condition during the tender and failed to provide promised support, leading to the plant's closure and bankruptcy of his investment vehicle. Latvia denied the claims. The tribunal issued a security for costs order of EUR 3 million, which Mr. Kazmin failed to post. After multiple procedural steps, including a failed disqualification attempt, the tribunal suspended proceedings and later granted Latvia's request to discontinue. The tribunal ordered Mr. Kazmin to pay Latvia's costs, finding his conduct unreasonable. The award was dispatched on 24 March 2021.
The detail
Parties: Eugene Kazmin v. Republic of Latvia
Case number: ICSID Case No. ARB/17/5
Outcome: The Tribunal discontinued the proceedings without prejudice and ordered the Claimant to pay the Respondent USD 250,000 (ICSID costs) and EUR 3,223,212.40 (Respondent's legal costs), with no interest.
Quantum: USD 250,000 and EUR 3,223,212.40
Applicable law: Latvia-Ukraine BIT (1997), ICSID Convention, ICSID Arbitration Rules
Issues in play: The case involved the interplay between the tribunal's power to order security for costs and the claimant's right to pursue arbitration; the claimant's failure to post security led to discontinuance.
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