Kompozit LLC v Republic of Moldova, SCC
SCC · Investment (ICSID and treaty) · Sweden · 14 Jun 2016
Why it matters
This emergency award is significant because it confirmed that SCC emergency arbitrator provisions apply retroactively to BITs concluded before the 2010 Rules, based on the preamble of the SCC Rules. It also addressed the cooling-off period, finding that it does not prevent emergency relief when urgent interim measures are needed to preserve the status quo and prevent irreparable harm.
Summary
Kompozit LLC, a Russian company, acquired shares in a Moldovan bank. The National Bank of Moldova issued Decision 43, finding that Kompozit and other shareholders acted in concert without permission, suspended their shareholder rights, and ordered them to sell their shares within three months or face cancellation. The National Commission of the Financial Market issued Decree 15/2 to implement the cancellation. Kompozit initiated arbitration under the Russia-Moldova BIT and applied for emergency interim measures to prevent the cancellation of its shares. The SCC appointed José Rosell as emergency arbitrator. The Respondent did not participate. The emergency arbitrator found prima facie jurisdiction, concluding that the 2010 SCC Rules (including emergency provisions) applied retroactively to the BIT because the treaty's reference to SCC Rules implied acceptance of future amendments. The arbitrator also held that the cooling-off period did not bar emergency relief, as its purpose is not to prevent urgent interim measures. On the merits, the arbitrator found a reasonable possibility that Kompozit would succeed on claims of discriminatory treatment. The arbitrator ordered the National Bank and the Respondent to refrain from enforcing the share cancellation pending the final award, but declined to restore suspended shareholder rights, leaving that to the tribunal. The award preserved the status quo and prevented irreparable harm.
The detail
Parties: Kompozit LLC v Republic of Moldova, SCC
Case number: italaw/cases/4187
Outcome: The Emergency Arbitrator ordered the National Bank of Moldova to refrain from enforcing the cancellation of Kompozit's shares and the Respondent to refrain from taking steps to cancel the shares, pending final award.
Applicable law: Convention between the Government of the Russian Federation and the Government of the Republic of Moldova on Encouragement and Mutual Protection of Investments (1998); SCC Arbitration Rules (2010); Vienna Convention on the Law of Treaties
Issues in play: The dispute involved the application of the Russia-Moldova BIT and the SCC Rules, particularly whether the emergency arbitrator provisions applied retroactively to a treaty signed before the 2010 Rules. Also at issue was the cooling-off period requirement and whether it barred emergency relief.
Read the full decision at italaw ↗
Locus Standi links to the source decision and publishes its own plain-language summary. It does not reproduce the text of the award.