Global Trading Resource Corp. and Globex International, Inc. v. Ukraine
ICSID · Investment (ICSID and treaty) · Ukraine · 1 Dec 2010
Why it matters
This case is a landmark application of ICSID Arbitration Rule 41(5) for summary dismissal of claims manifestly without legal merit. It clarified that simple sales contracts, even those with state involvement, do not qualify as investments under the ICSID Convention. The decision reinforces the outer limits of ICSID jurisdiction, distinguishing investment from ordinary trade, and provides guidance on the procedural standard for early dismissal.
Summary
Two US poultry exporters, Global Trading Resource Corp. and Globex International, Inc., brought an ICSID arbitration against Ukraine under the US-Ukraine Bilateral Investment Treaty. They alleged that Ukraine, through its State Reserve and a private nominee, breached contracts for the purchase of poultry. The claimants argued that the contracts were part of a government initiative to reduce poultry prices and thus constituted an investment. Ukraine objected under ICSID Arbitration Rule 41(5), arguing the claims were manifestly without legal merit because the contracts were pure commercial sales, not investments. The tribunal agreed, finding that the contracts were standard CIF sales of perishable goods, lacking the characteristics of an investment such as a contribution, duration, risk, and contribution to economic development. The tribunal held that the claims fell outside the scope of the ICSID Convention and the BIT, and dismissed them summarily. The decision is significant for establishing that Rule 41(5) can be used to dismiss claims based on jurisdictional grounds, and for reaffirming that simple sales transactions do not qualify as investments under ICSID.
The detail
Parties: Global Trading Resource Corp. and Globex International, Inc. v. Ukraine
Case number: ICSID Case No. ARB/09/11
Outcome: Ukraine's objection under ICSID Arbitration Rule 41(5) upheld; claims dismissed as manifestly without legal merit; no order as to costs.
Applicable law: ICSID Convention, US-Ukraine BIT (1994), ICSID Arbitration Rules (2006)
Issues in play: The dispute centered on whether the claimants' poultry sales contracts constituted an 'investment' under the ICSID Convention and the BIT. The tribunal held that pure commercial transactions for the sale of goods fall outside ICSID's jurisdiction.
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