Inmaris Perestroika Sailing Maritime Services GmbH and Others v. Ukraine
ICSID · Investment (ICSID and treaty) · Ukraine · 1 Mar 2012
Why it matters
This case is notable for its detailed analysis of fair and equitable treatment and expropriation in the context of a contractual joint venture involving a state-owned ship. The tribunal's approach to calculating lost profits and its rejection of moral damages in a commercial investment dispute provide guidance for similar cases. It also addressed attribution of acts of state entities and the scope of investment protection under the BIT.
Summary
The dispute arose from a series of contracts between German investors (Inmaris group) and a Ukrainian state-owned educational institution regarding the operation of the sail training ship Khersones. The investors used the ship for commercial sailing tours while the institution used it for training cadets. In April 2006, Ukraine's Ministry prohibited the ship from leaving Ukrainian territorial waters, effectively ending the investors' business. The investors initiated ICSID arbitration under the Germany-Ukraine BIT, claiming breach of fair and equitable treatment, arbitrary measures, and expropriation. The tribunal found Ukraine liable on all three grounds, holding that the travel ban was arbitrary and disproportionate, and that it substantially deprived the investors of the value of their investment. The tribunal awarded damages for insolvency claims, lost profits (calculated using a discounted cash flow method), frustrated expenses, and an outstanding loan, but denied moral damages and a counterclaim by Ukraine for winter costs. The award is significant for its detailed damages calculation and its rejection of moral damages in a commercial context.
The detail
Parties: Inmaris Perestroika Sailing Maritime Services GmbH and Others v. Ukraine
Case number: ICSID Case No. ARB/08/8
Outcome: Tribunal found Ukraine breached fair and equitable treatment, arbitrary measures, and expropriation; awarded damages for insolvency claims, lost profits, frustrated expenses, and loan repayment; rejected moral damages and counterclaim; each party bears own costs.
Quantum: EUR [redacted] for insolvency claims and costs; EUR [redacted] for lost profits and frustrated expenses plus interest; EUR [redacted] for outstanding loan
Applicable law: Germany-Ukraine BIT (1993); ICSID Convention; ICSID Arbitration Rules 2006
Issues in play: The case involved the fair and equitable treatment standard, prohibition of arbitrary measures, and expropriation under the BIT. The tribunal considered whether Ukraine's travel ban on a ship constituted a breach of these protections.
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