Hassan Awdi, Enterprise Business Consultants, Inc. and Alfa El Corporation v. Romania
ICSID · Investment (ICSID and treaty) · Romania · 2 Mar 2015
Why it matters
This case clarifies the scope of FET in relation to legislative changes and judicial decisions. It confirms that a State's repeal of a specific law benefiting an investor can breach FET if it frustrates legitimate expectations. Also, it addresses the interaction between investment treaty protections and domestic restitution laws, holding that failure to compensate for a property taken by judicial decision violates FET.
Summary
Hassan Awdi, a US investor, and his companies invested in Romania after the fall of communism. They acquired Rodipet, a state-owned press distribution company, through a privatization contract with AVAS (Romanian state authority). The contract required Awdi to invest EUR 3.75 million and maintain employment, while Romania promised to extinguish Rodipet's tax debts and grant a 49-year land concession for distribution points. Romania enacted Law 442 in 2004 to facilitate the concession, but repealed it in 2005. Awdi also purchased Casa Bucur, a historic property, from a state-owned company, but Romania's Supreme Court later ordered its restitution to former owners under Law 10/2001. Awdi claimed Romania breached the US-Romania BIT by failing to provide fair and equitable treatment, full protection, expropriating without compensation, and violating the umbrella clause. The Tribunal dismissed jurisdiction objections (including fork-in-the-road) and found Romania breached FET regarding Rodipet by repealing Law 442, which destroyed the value of the concession and the investment. For Casa Bucur, the Tribunal found Romania breached FET by failing to compensate Awdi for the price paid when the property was taken by judicial decision. The Tribunal awarded EUR 7.5 million for Rodipet and EUR 147,352 for Casa Bucur, plus interest. It rejected expropriation claims and other BIT violations. The award is notable for applying FET to legislative repeal and judicial restitution without compensation.
The detail
Parties: Hassan Awdi, Enterprise Business Consultants, Inc. and Alfa El Corporation v. Romania
Case number: ICSID Case No. ARB/10/13
Outcome: Tribunal found Romania breached fair and equitable treatment; awarded EUR 7,543,176.59 to Hassan Awdi and EBC for Rodipet, EUR 147,352 to Alfa El Corporation for Casa Bucur, plus interest and partial costs.
Quantum: EUR 7,543,176.59 (Rodipet) + EUR 147,352 (Casa Bucur)
Applicable law: US-Romania BIT (1992), ICSID Convention
Issues in play: Fair and equitable treatment (FET) under BIT vs. Romania's sovereign acts: repeal of Law 442 (land concession) and restitution of property via Supreme Court decision.
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