Nykomb Synergetics Technology Holding AB v. The Republic of Latvia, SCC
SCC · Investment (ICSID and treaty) · Sweden · 16 Dec 2003
Why it matters
Nykomb v Latvia is a landmark early investment treaty award under the Energy Charter Treaty. It established that a state-owned enterprise's refusal to pay a contractually agreed double tariff for electricity could amount to a breach of the ECT's fair and equitable treatment standard. The tribunal also clarified attribution of conduct of state entities to the state and awarded compensation for lost profits, setting a precedent for investor protection in the energy sector.
Summary
Nykomb Synergetics Technology Holding AB, a Swedish company, invested in a cogeneration plant in Bauska, Latvia, through its subsidiary Windau. The plant was built under a contract with Latvenergo, the state-owned electricity company, which agreed to purchase electricity at a double tariff for the first eight years. After the plant became operational, Latvenergo paid only 0.75 of the tariff, citing changes in Latvian energy regulations. Nykomb initiated arbitration under the Energy Charter Treaty (ECT) at the Stockholm Chamber of Commerce. The tribunal found that Latvia, through Latvenergo's actions, breached the ECT's obligation of fair and equitable treatment. It rejected Latvia's jurisdictional objections, holding that the dispute concerned an investment and that Latvenergo's conduct was attributable to the state. The tribunal awarded Nykomb Lats 1,600,000 in damages for past losses and ordered Latvia to ensure payment of the double tariff for the remainder of the eight-year period. The award is significant for its application of the ECT and attribution principles.
The detail
Parties: Nykomb Synergetics Technology Holding AB v. The Republic of Latvia, SCC
Case number: italaw/cases/759
Outcome: Latvia ordered to pay Nykomb Lats 1,600,000 plus interest and to ensure payment of double tariff for electricity from Windau's Bauska plant until 16 September 2007.
Quantum: Lats 1,600,000
Applicable law: Energy Charter Treaty (ECT), SCC Rules
Issues in play: The dispute involved the interpretation of the double tariff provision under Latvian law and the ECT's fair and equitable treatment and expropriation protections.
Read the full decision at italaw ↗
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