Oleg Deripaska v. Republic of Montenegro
PCA · Investment (ICSID and treaty) · Montenegro · 15 Oct 2019
Why it matters
This case is a landmark on state succession to bilateral investment treaties. The Tribunal held that Montenegro did not succeed to the FRY-Russia BIT, applying the 'clean slate' principle under customary international law. It rejected arguments of automatic succession for BITs and found no agreement between Montenegro and Russia to continue the treaty. The decision clarifies the high bar for establishing treaty succession and has implications for other BITs of dissolved states.
Summary
Oleg Deripaska, a Russian national, brought an investment treaty claim against Montenegro under the 1995 FRY-Russia BIT, alleging mistreatment of his investments in Montenegro's aluminium sector. Montenegro objected to jurisdiction, arguing that the BIT never entered into force between Montenegro and Russia after Montenegro's independence in 2006. The Tribunal agreed, finding that Montenegro did not succeed to the BIT. Under customary international law, a newly independent state starts with a 'clean slate' unless it agrees otherwise. The Tribunal examined Montenegro's unilateral statements, diplomatic notes with Russia, and its practice with other states, concluding that Montenegro did not intend to succeed to the BIT. The Tribunal also rejected arguments that the BIT continued by virtue of Montenegro's Decision on Independence or an exchange of notes. Having found no jurisdiction, the Tribunal did not address the other eight objections. It ordered Deripaska to pay Montenegro's costs.
The detail
Parties: Oleg Deripaska v. Republic of Montenegro
Case number: PCA Case No. 2017-07
Outcome: Tribunal granted Respondent's first objection to jurisdiction, declined jurisdiction over Claimant's claims, and ordered Claimant to pay Respondent €1,600,730.85 in costs.
Quantum: €1,600,730.85 (costs)
Applicable law: UNCITRAL Arbitration Rules (1976); Agreement between the Government of the Russian Federation and the Federal Government of the Republic of Yugoslavia for the Promotion and Protection of Investments (FRY-Russia BIT, 11 October 1995); Vienna Convention on the Law of Treaties; customary international law on state succession
Issues in play: Whether Montenegro succeeded to the FRY-Russia BIT after its independence from Serbia and Montenegro. The Tribunal applied the clean slate rule and found no automatic succession, no agreement to succeed, and no other basis for the BIT to bind Montenegro.
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