KT Asia Investment Group B.V. v. Republic of Kazakhstan
ICSID · Investment (ICSID and treaty) · Kazakhstan · 17 Oct 2013
Why it matters
This case is a landmark application of the Salini test for investment under ICSID. The tribunal held that a shell company with no real economic contribution, short intended duration, and no genuine risk did not qualify as an investment, even though it held shares. It underscores that the objective criteria of contribution, duration, and risk are essential, and that treaty shopping or restructuring without substantive economic activity will not confer jurisdiction.
Summary
KT Asia Investment Group B.V., a Dutch shell company ultimately owned by Kazakh businessman Mukhtar Ablyazov, claimed that Kazakhstan expropriated its 9.96% shareholding in BTA Bank. The tribunal dismissed the claim for lack of jurisdiction ratione materiae, finding that KT Asia's shareholding did not constitute an 'investment' under the ICSID Convention or the Netherlands-Kazakhstan BIT. Applying the Salini test, the tribunal held that KT Asia made no real contribution (it was not capitalized, had no assets, and financed the share purchase via a loan from related entities), the intended duration was short (the shares were meant to be resold quickly), and there was no genuine risk (the beneficial owner shielded the company from loss). The tribunal emphasized that the objective criteria of contribution, duration, and risk must be met, regardless of the form of the transaction. The award is significant for its strict application of the Salini test and its refusal to allow treaty shopping or corporate restructuring to create jurisdiction where no real investment exists.
The detail
Parties: KT Asia Investment Group B.V. v. Republic of Kazakhstan
Case number: ICSID Case No. ARB/09/8
Outcome: The Tribunal declined jurisdiction because the Claimant did not hold a qualifying 'investment' under the ICSID Convention and the BIT. Each party bears its own costs and half of ICSID costs.
Applicable law: ICSID Convention; Netherlands-Kazakhstan BIT (2007); Salini test for investment
Issues in play: The definition of 'investment' under Article 25(1) of the ICSID Convention and Article 1(a) of the BIT, specifically whether the Claimant's shareholding met the objective criteria of contribution, duration, and risk.
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