Krederi Ltd. v. Ukraine
ICSID · Investment (ICSID and treaty) · Ukraine · 2 Jul 2018
Why it matters
This case is notable for its detailed analysis of the MFN clause's application to dispute resolution provisions, ultimately rejecting the import of consent to ICSID arbitration. It also clarifies the high threshold for denial of justice claims, requiring a showing of serious procedural defects beyond mere misapplication of law. The tribunal's cost allocation, considering the parties' conduct and relative success, provides guidance on ICSID cost decisions.
Summary
Krederi Ltd., a UK company, invested in three land plots in Kiev, Ukraine, intending to develop a multi-functional complex. The plots were allegedly lost due to four Ukrainian court proceedings that Krederi claimed were conducted in an irregular fashion, violating due process. Krederi brought claims under the UK-Ukraine BIT for expropriation, fair and equitable treatment (FET), full protection and security, and unreasonable impairment. Ukraine objected to jurisdiction, arguing that the BIT did not contain consent to ICSID arbitration and that Krederi's investment was made in bad faith and in violation of Ukrainian law. The tribunal, by majority, upheld jurisdiction, finding that Article 8 of the BIT provided consent to ICSID arbitration for disputes concerning the amount of compensation for expropriation, but not for other BIT claims. The majority also rejected the MFN clause as a basis to import broader consent from other BITs. On the merits, the tribunal unanimously dismissed all claims. It held that the Ukrainian court proceedings did not amount to a denial of justice because Krederi failed to exhaust local remedies and did not demonstrate serious procedural defects. The tribunal also found no expropriation, as the court decisions were not arbitrary or discriminatory. The tribunal ordered each party to bear its own costs and directed Ukraine to reimburse Krederi for half of the proceedings costs advanced.
The detail
Parties: Krederi Ltd. v. Ukraine
Case number: ICSID Case No. ARB/14/17
Outcome: All claims dismissed. Each party bears its own costs; Respondent to reimburse Claimant USD 313,711.67 for half of the proceedings costs advanced by Claimant.
Quantum: USD 313,711.67 (costs reimbursement)
Applicable law: UK-Ukraine BIT (1993), ICSID Convention
Issues in play: The case involved the interpretation of the UK-Ukraine BIT's MFN clause to import consent to ICSID arbitration, and the standard for denial of justice under fair and equitable treatment.
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.