Parkerings-Compagniet AS v. Republic of Lithuania
ICSID · Investment (ICSID and treaty) · Lithuania · 11 Sep 2007
Why it matters
This case is a landmark for distinguishing contractual breaches from expropriation under BITs. The tribunal held that a state's breach of contract, without use of sovereign authority, does not amount to expropriation. It also clarified that legitimate expectations must be based on specific commitments, not general regulatory stability. The case is frequently cited for the principle that investors must first seek redress in domestic courts for contractual claims before invoking international arbitration.
Summary
Parkerings-Compagniet AS, a Norwegian company, invested in a parking project in Vilnius, Lithuania, through a consortium that won a tender and signed an agreement with the Vilnius Municipality. The project involved building and operating parking facilities. After changes in Lithuanian law (new fees, clamping regulations) and disputes over performance, the Municipality terminated the agreement. Parkerings claimed that Lithuania violated the Norway-Lithuania BIT by failing to provide fair and equitable treatment, protection, non-discrimination, and by expropriating its investment without compensation. The tribunal found that the Municipality acted as a contracting party, not as a sovereign, and that the termination was a contractual breach, not expropriation. It also held that Lithuania did not frustrate legitimate expectations because Parkerings could not reasonably expect the legal framework to remain unchanged. The discrimination claim failed because the comparator investor was not in like circumstances. All claims were dismissed, and each party bore its own costs.
The detail
Parties: Parkerings-Compagniet AS v. Republic of Lithuania
Case number: ICSID Case No. ARB/05/8
Outcome: All claims dismissed. Each party bears its own costs and half of the tribunal costs.
Applicable law: Norway-Lithuania BIT (1992); ICSID Convention; Lithuanian law
Issues in play: Fair and equitable treatment, non-discrimination, expropriation under the BIT vs. contractual breach and sovereign acts.
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