Luigiterzo Bosca v. Republic of Lithuania
PCA · Investment (ICSID and treaty) · Lithuania · 17 May 2013
Why it matters
This case is notable for its detailed analysis of what constitutes an 'investment' under a BIT, including the contribution of know-how and services. It also illustrates the application of the fair and equitable treatment standard to privatization processes, holding that a state's annulment of a tender award without proper justification can breach the BIT. The case further addresses the admissibility of claims where the investor has not exhausted local remedies, finding that such a requirement is not a jurisdictional bar under the BIT.
Summary
Luigiterzo Bosca, an Italian entrepreneur, participated in the privatization of AB Alita, a Lithuanian beverage company, in 2003. After his bid was accepted, the Lithuanian State Property Fund annulled the tender results, citing irregularities. Bosca initiated arbitration under the Italy-Lithuania BIT, claiming expropriation, unfair treatment, and discrimination. The Tribunal first addressed jurisdiction, finding that Bosca had made a qualifying 'investment' through his contributions of know-how, services, and financial guarantees, even though he did not purchase shares. It also held that the claim was admissible despite Bosca's failure to pursue local remedies, as the BIT did not require exhaustion. On the merits, the Tribunal found that Lithuania breached the fair and equitable treatment standard by arbitrarily annulling the tender without a proper basis and by failing to provide a transparent process. However, it rejected claims of expropriation, national treatment, and MFN violations. The Tribunal awarded Bosca EUR 1,327,000 in damages, representing his lost opportunity, plus interest and 80% of his legal costs. The award underscores the importance of procedural fairness in state privatization processes and clarifies the scope of investment protection for pre-investment activities.
The detail
Parties: Luigiterzo Bosca v. Republic of Lithuania
Case number: PCA Case No. 2011-05
Outcome: The Tribunal found that Lithuania breached the fair and equitable treatment standard under the Italy-Lithuania BIT and awarded Bosca EUR 1,327,000 in damages plus interest and costs.
Quantum: EUR 1,327,000
Applicable law: Agreement between the Government of the Republic of Lithuania and the Government of the Italian Republic on the Promotion and Protection of Investments (1994); UNCITRAL Arbitration Rules (1976)
Issues in play: The case involved the definition of 'investment' under the BIT, attribution of acts of state entities to the state, and the fair and equitable treatment standard. The Tribunal also considered whether the investor had made a qualifying investment and whether the state's annulment of a tender award was arbitrary and discriminatory.
Read the full decision at italaw ↗
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