OOO Manolium Processing v. Republic of Belarus
PCA · Investment (ICSID and treaty) · Belarus · 22 Jun 2021
Why it matters
This award is one of the first to interpret the investment protection provisions of the EEU Treaty, setting important precedents for investor-state arbitration under that treaty. It clarifies the temporal application of the treaty to disputes arising before its entry into force and confirms that abusive tax measures can amount to expropriation. The decision also addresses the relationship between domestic law remedies and treaty claims.
Summary
OOO Manolium-Processing, a Russian company, entered into an investment contract with the Minsk Municipality and Minsktrans in 2003. Under the contract, Manolium agreed to build public facilities (a trolleybus depot, pull station, and road) in exchange for the right to develop a shopping mall in central Minsk. After completing the facilities, a dispute arose over land tax assessments. The tax authorities imposed significant tax liabilities on Manolium's Belarusian subsidiary, leading to bankruptcy proceedings and the transfer of the facilities to the municipality without compensation. The investment contract was also terminated by Belarusian courts. Manolium initiated arbitration under the EEU Treaty, claiming expropriation and breach of fair and equitable treatment. The Tribunal upheld jurisdiction over the tax dispute and part of the termination dispute, finding that Belarus's tax measures were arbitrary and abusive, constituting expropriation. It awarded USD 20,434,679 for the loss of the facilities but denied lost profits for the mall. The Tribunal also ordered Belarus to pay 75% of Claimant's legal costs and all arbitration costs.
The detail
Parties: OOO Manolium Processing v. Republic of Belarus
Case number: PCA Case No. 2018-06
Outcome: Claimant prevailed in part. Tribunal found Belarus breached the EEU Treaty by expropriating Claimant's investment through abusive tax measures and ordered compensation of USD 20,434,679 plus interest and costs.
Quantum: USD 20,434,679
Applicable law: Treaty on the Eurasian Economic Union (EEU Treaty) of 29 May 2014, Annex 16 (Protocol); UNCITRAL Arbitration Rules 2013; Belarusian law
Issues in play: The case involved the interplay between Belarusian tax law and investment treaty protections under the EEU Treaty. The Tribunal had to determine whether tax enforcement measures constituted expropriation and whether the dispute fell within the treaty's temporal scope.
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