Pantechniki S.A. Contractors & Engineers (Greece) v. The Republic of Albania
ICSID · Investment (ICSID and treaty) · Albania · 30 Jul 2009
Why it matters
This award is notable for its detailed analysis of the Salini test for qualifying investments under ICSID, and for its discussion of the denial of justice standard. The sole arbitrator, Jan Paulsson, applied a rigorous approach to the definition of investment, requiring a contribution to the host state's economic development. The case also illustrates the limits of BIT protection for contractual disputes and the high threshold for establishing denial of justice.
Summary
Pantechniki, a Greek construction company, entered into two contracts with the Albanian General Roads Directorate in 1994 to build roads in Albania. In March 1997, severe civil unrest in Albania led to the destruction of the company's equipment and site. Pantechniki claimed compensation from the Albanian government, which appointed a Special Commission to assess damages. The Commission valued losses at about 145 million Albanian lek (around $1.1 million), but the Ministry of Finance refused to pay, citing that the state was not liable for damages caused by riots under Albanian law. Pantechniki then brought an ICSID claim under the Greece-Albania BIT, arguing that Albania failed to provide full protection and security, fair and equitable treatment, and that it was denied justice. The sole arbitrator, Jan Paulsson, dismissed all claims. He held that Pantechniki's contracts did not constitute a qualifying 'investment' under the ICSID Convention because they lacked a significant contribution to Albania's economic development, applying the Salini test. He also rejected the denial of justice claim, finding that the Albanian courts had not been given a proper opportunity to correct any injustice, as the case had been abandoned before the Supreme Court. The award is significant for its strict interpretation of the investment requirement and its clarification of the exhaustion of local remedies rule in denial of justice claims.
The detail
Parties: Pantechniki S.A. Contractors & Engineers (Greece) v. The Republic of Albania
Case number: ICSID Case No. ARB/07/21
Outcome: All claims dismissed. Each party bears its own costs.
Applicable law: Greece-Albania BIT (1991), ICSID Convention, Albanian law
Issues in play: The definition of 'investment' under the ICSID Convention and the BIT; the standard for denial of justice; the distinction between contractual and treaty claims.
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