MNSS B.V. and Recupero Credito Acciaio N.V. v. Montenegro
ICSID · Investment (ICSID and treaty) · Montenegro · 4 May 2016
Why it matters
This case is notable for its detailed analysis of the distinction between contract claims and treaty claims in investment arbitration. The Tribunal clarified that actions of a bankruptcy administrator are not attributable to the State absent special circumstances. It also addressed the standard for fair and equitable treatment, finding no breach for failure to warn about a bank's financial condition. The case illustrates the limits of MFN treatment when comparing companies in different sectors.
Summary
The dispute arose from investments by Dutch and Curaçao companies in a Montenegrin steel mill, Zeljezara Niksic (ZN). The Claimants alleged that Montenegro violated the Netherlands-Yugoslavia BIT through various measures, including interference with bank accounts, failure to protect the investment, and discriminatory treatment in bankruptcy proceedings. The Tribunal, constituted under the ICSID Additional Facility, first addressed jurisdiction. It upheld jurisdiction over treaty claims but declined jurisdiction over contract claims arising from the Privatization Agreement and Assignment Agreement, as those were subject to Montenegrin courts. On the merits, the Tribunal found that Montenegro breached its obligation to ensure protection of persons and property by failing to prevent a mob attack on ZN's premises, but awarded no compensation because the Claimants did not prove damages. The majority dismissed the claim that Montenegro failed to warn MNSS about Prva Banka's financial condition, finding no duty to warn. Claims for fair and equitable treatment, non-impairment, most constant protection and security, MFN treatment, free transfer of payments, and expropriation were dismissed. The Tribunal held that the bankruptcy administrator's actions were not attributable to Montenegro, and that court decisions did not amount to expropriation without a showing of denial of justice. The costs were apportioned with each party bearing its own costs and Claimants paying the Tribunal and ICSID expenses.
The detail
Parties: MNSS B.V. and Recupero Credito Acciaio N.V. v. Montenegro
Case number: ICSID Case No. ARB(AF)/12/8
Outcome: The Tribunal upheld jurisdiction over treaty claims but dismissed most claims on the merits; it found a breach of the obligation to ensure protection of persons and property but awarded no compensation; each party bears its own costs, and Claimants pay the Tribunal and ICSID costs.
Applicable law: Agreement on Encouragement and Reciprocal Protection of Investments Between the Kingdom of the Netherlands and the Federal Republic of Yugoslavia (2002); Montenegrin Foreign Investment Laws (2000 and 2011); ICSID Additional Facility Rules
Issues in play: The case involved the interplay between contract claims under a privatization agreement and treaty claims under the BIT. The Tribunal distinguished between contractual obligations and treaty standards, holding that most of the Claimants' complaints were contractual and outside its jurisdiction.
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