Mr. Kristian Almås and Mr. Geir Almås v. The Republic of Poland, PCA Case No 2015-13
PCA · Investment (ICSID and treaty) · Poland · 27 Jun 2016
Why it matters
This award clarifies the limits of state responsibility for acts of state-owned enterprises acting in a commercial capacity. The tribunal held that termination of a lease by a state agency for contractual breaches was not an exercise of governmental authority, and that MFN clauses cannot create jurisdiction where none exists under the basic treaty. It reinforces the distinction between commercial and sovereign acts in investment arbitration.
Summary
The case arose from a dispute between Norwegian investors (the Almås brothers) and Poland concerning a 30-year lease of 4,200 hectares of farmland. The lease was held by Pol Farm, a Polish company wholly owned by the Claimants. In 2009, the Polish Agricultural Property Agency (ANR) terminated the lease, citing Pol Farm's failure to pay rent and public dues, misuse of the land, and other breaches. The Claimants alleged that the termination was politically motivated and amounted to expropriation without compensation, violating the Norway-Poland BIT. They also invoked the MFN clause to import an umbrella clause from other BITs. The tribunal first upheld jurisdiction over expropriation claims but rejected the attempt to expand jurisdiction via MFN. On the merits, the tribunal analyzed whether ANR's conduct was attributable to Poland under the ILC Articles. It found that ANR was not a state organ (Article 4) and that the termination was a commercial act, not a governmental function (Article 5), because ANR acted as a landlord enforcing contractual rights. The tribunal also found no evidence of government instructions (Article 8). The termination was justified under the lease terms, and there was no unlawful policy. Consequently, the tribunal dismissed all claims and ordered the Claimants to bear the arbitration costs.
The detail
Parties: Mr. Kristian Almås and Mr. Geir Almås v. The Republic of Poland, PCA Case No 2015-13
Case number: italaw/cases/4288
Outcome: The Tribunal rejected all claims and ordered the Claimants to pay the Respondent's share of arbitration costs.
Applicable law: Norway-Poland BIT (1990), UNCITRAL Rules (1976), ILC Articles on State Responsibility
Issues in play: The case involved attribution of conduct of a state-owned entity (ANR) to Poland under ILC Articles 4, 5, and 8, and the scope of the MFN clause to import an umbrella clause.
Read the full decision at italaw ↗
Locus Standi links to the source decision and publishes its own plain-language summary. It does not reproduce the text of the award.