Mazen Al Ramahi v. Hungary
ICSID · Investment (ICSID and treaty) · Hungary · 19 Apr 2021
Why it matters
This case illustrates the limits of investor protection under the FET standard when domestic bankruptcy proceedings are challenged. The tribunal held that Hungary's application of its Bankruptcy Act did not violate the BIT, emphasizing that states retain discretion in insolvency matters. It also addressed denial of justice claims, requiring a high threshold of procedural unfairness. The award is notable for its cost allocation, reducing the respondent's claimed fees due to lack of detail and access-to-justice concerns.
Summary
Mazen Al Ramahi, a Jordanian investor, owned a Hungarian company that was placed into liquidation by a Hungarian court due to trademark infringement debts. Al Ramahi claimed Hungary violated the Hungary-Jordan BIT by: (1) applying Section 27(2)(a) of the Bankruptcy Act, which allowed the court to appoint a state liquidator; (2) the court's alleged denial of justice; (3) Hungary filing an 8 billion euro claim based on a previously set-aside court decision; (4) the state liquidator's conduct; (5) undue delay in liquidation; (6) failure to provide full protection and security; and (7) expropriation. The tribunal dismissed Hungary's jurisdictional objection (ratione materiae) but rejected all claims on the merits. It found that Hungary's actions were within its regulatory discretion, the court decisions were not manifestly unjust, and there was no expropriation as the investor retained ownership. The tribunal also criticized Al Ramahi for failing to produce documents and cooperate. On costs, the tribunal awarded Hungary partial attorney fees (HUF 221,250,000) and full expert fees (USD 30,000), with post-award interest at 1.85% compounded semi-annually.
The detail
Parties: Mazen Al Ramahi v. Hungary
Case number: ICSID Case No. ARB/17/45
Outcome: All of Claimant's claims dismissed; Respondent awarded partial costs.
Applicable law: Hungary-Jordan BIT (2007); ICSID Convention; ICSID Arbitration Rules (2006)
Issues in play: Fair and equitable treatment (FET) under Article 2.2 of the BIT vs. Hungary's Bankruptcy Act Section 27(2)(a); expropriation under Article 5 vs. sovereign regulatory powers.
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