Mohammad Ammar Al-Bahloul v. The Republic of Tajikistan
SCC · Investment (ICSID and treaty) · Sweden · 2 Sep 2009
Why it matters
This case is a rare example of an SCC award under the Energy Charter Treaty where the respondent state defaulted. It clarifies that a state's failure to issue promised licenses can breach the fair and equitable treatment standard, even without expropriation. The award also addresses attribution of conduct and the standard for indirect expropriation of contractual rights.
Summary
Mohammad Ammar Al-Bahloul, an Austrian investor, entered into several agreements with Tajikistan's State Committee for Oil & Gas for oil and gas exploration. He claimed Tajikistan breached the Energy Charter Treaty by failing to issue exploration licenses under four December 2000 agreements, and by court decisions that reduced his stake in joint ventures. Tajikistan did not participate in the arbitration. The SCC tribunal, seated in Stockholm, first upheld jurisdiction under Article 26 ECT. On liability, it found that Tajikistan's failure to issue the licenses violated the fair and equitable treatment standard under Article 10(1) because the state had contractually undertaken to ensure the licenses and failed to do so without justification. However, the tribunal rejected claims of expropriation, holding that the non-issuance was not a permanent taking of contractual rights, and that the court decisions were not manifestly contrary to Tajik law. The tribunal also dismissed claims for denial of justice, lack of due process, and discriminatory treatment. The award is a partial award on jurisdiction and liability; quantum and costs were deferred to a later phase.
The detail
Parties: Mohammad Ammar Al-Bahloul v. The Republic of Tajikistan
Case number: SCC Case
Outcome: Tribunal found it had jurisdiction and held Tajikistan liable for breach of Article 10(1) ECT for failing to issue exploration licenses under four December 2000 agreements; all other claims denied.
Applicable law: Energy Charter Treaty (ECT); SCC Arbitration Rules; Tajik law
Issues in play: Fair and equitable treatment under ECT Article 10(1) vs. Tajikistan's failure to issue licenses as contractually promised; also due process and expropriation claims under Articles 10 and 13.
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