Ioannis Kardassopoulos v. The Republic of Georgia
ICSID · Investment (ICSID and treaty) · Georgia · 3 Mar 2010
Why it matters
This award is a landmark in investment treaty arbitration for its detailed analysis of the provisional application of the Energy Charter Treaty (ECT) and its application to investments made before the ECT's entry into force. It also clarified the standard of compensation for expropriation under the ECT, applying the Hull formula (prompt, adequate, and effective compensation) and rejecting Georgia's argument that the investment had no value. The case is frequently cited for its discussion of attribution of state entity acts and the calculation of compound interest.
Summary
The case concerns an investment by Greek and Israeli nationals in a joint venture to rehabilitate an oil pipeline in Georgia. In the early 1990s, Ioannis Kardassopoulos and Ron Fuchs, through their Panamanian company Tramex, entered into a joint venture with Georgia's state oil company SakNavtobi to form GTI Ltd., which held a concession to operate the pipeline. After Georgia transferred GTI's rights to a new state-owned entity (GIOC) without compensation, the claimants initiated ICSID arbitration under the ECT and bilateral investment treaties. The tribunal found that Georgia had unlawfully expropriated Kardassopoulos' investment and breached the fair and equitable treatment standard owed to Fuchs. It awarded each claimant US$15.1 million in principal, plus compound interest from the date of expropriation (February 1996) to the award date, totaling over US$45 million each, and ordered Georgia to pay all arbitration costs. The tribunal rejected Georgia's jurisdictional objections based on temporal limitations and equitable prescription, and held that the ECT applied provisionally from its signature. The award is notable for its thorough analysis of the ECT's provisional application and its application of the Hull formula for compensation.
The detail
Parties: Ioannis Kardassopoulos v. The Republic of Georgia
Case number: ICSID Case No. ARB/05/18
Outcome: Georgia unlawfully expropriated Kardassopoulos' investment and breached fair and equitable treatment to Fuchs; awarded US$15.1 million each plus compound interest and costs.
Quantum: US$30,249,473.66 each (principal plus pre-award interest) plus costs US$7,942,297 total
Applicable law: Energy Charter Treaty (ECT), Georgia/Greece BIT, Georgia/Israel BIT, ICSID Convention
Issues in play: The tribunal addressed jurisdiction ratione temporis under the BITs, the provisional application of the ECT, and the standard of compensation for expropriation and fair and equitable treatment.
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