Ömer Dede and Serdar Elhüseyni v. Romania
ICSID · Investment (ICSID and treaty) · Romania · 5 Sep 2013
Why it matters
This case clarifies the interpretation of pre-arbitration requirements in investment treaties, specifically Article 6(4) of the Turkey-Romania BIT. The Tribunal held that the local litigation requirement applies to disputes that could substantially resolve the same controversy as the treaty claim, rejecting a strict 'triple identity' test. It also underscores that failure to exhaust local remedies or litigate substantially the same dispute can bar jurisdiction, even if the treaty claim is based on expropriation.
Summary
The case concerns a dispute under the Turkey-Romania BIT regarding alleged expropriation of shares in a Romanian agricultural company, SC IMUM SA. Claimants, Turkish nationals, asserted that Romanian authorities (AVAS and the government) unlawfully took their shares. The Tribunal bifurcated proceedings to address jurisdictional objections under Articles 6(2) and 6(4) of the BIT. Article 6(4) requires that an investment dispute be submitted to local courts before arbitration, unless the parties agree otherwise. Claimants had initiated some local court actions but not for the same dispute as the treaty claim. The Tribunal analyzed the scope of Article 6(4), considering tests such as 'triple identity' (same parties, object, cause of action) and the 'Urbaser' test (whether local claims allow resolution to the same extent). It concluded that the most reasonable interpretation requires that local litigation cover substantially the same dispute as the arbitration. Since Claimants never brought such a claim, they failed to satisfy the precondition. The Tribunal also noted that Claimants did not argue futility or MFN clauses. Consequently, the Tribunal declined jurisdiction, without prejudice to refiling after compliance. Costs were split equally.
The detail
Parties: Ömer Dede and Serdar Elhüseyni v. Romania
Case number: ICSID Case No. ARB/10/22
Outcome: Tribunal declined jurisdiction; each party bears its own costs; costs of arbitration split 50/50.
Applicable law: Turkey-Romania BIT (1996); ICSID Convention
Issues in play: The dispute centered on whether Claimants had satisfied the preconditions to arbitration under Article 6(4) of the BIT, which required submission of the dispute to local courts before arbitration. The Tribunal interpreted the scope of disputes that must be litigated locally.
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