PJSC CB PrivatBank and Finance Company Finilon LLC v. Russian Federation
PCA · Investment (ICSID and treaty) · Russia · 27 Mar 2017
Why it matters
This interim award is a landmark decision on the territorial application of bilateral investment treaties following a change of sovereignty. It held that the Russia-Ukraine BIT continued to apply to Crimea after Russia's annexation, rejecting the argument that only investments made after the annexation were protected. The decision clarifies that a BIT remains in force over a territory even when the host state changes, as long as the treaty is not terminated or suspended.
Summary
The case concerns Ukrainian investors (PrivatBank and Finilon) who owned banking assets in Crimea before Russia's annexation in March 2014. They claimed that Russia's actions after annexation violated the Russia-Ukraine BIT. Russia did not participate in the proceedings. The tribunal had to decide whether the BIT applied to Crimea after the annexation and whether investments made before the annexation were protected. The tribunal held that the BIT continued to apply to Crimea because neither party had terminated or suspended it, and applying the treaty to Crimea was consistent with pacta sunt servanda. It also found that the BIT did not require investments to be made after the annexation; it was enough that the investments existed in Crimea when Russia assumed control. The tribunal therefore upheld jurisdiction over the claims, deferring other jurisdictional issues (e.g., whether the claimants qualified as investors) to the merits. The decision is significant for its analysis of treaty succession and the protection of pre-existing investments in disputed territories.
The detail
Parties: PJSC CB PrivatBank and Finance Company Finilon LLC v. Russian Federation
Case number: PCA Case No. 2015-21
Outcome: Tribunal found it had jurisdiction over claims concerning investments in Crimea made before March 2014; joined other jurisdictional issues to merits.
Applicable law: Agreement Between the Government of the Russian Federation and the Cabinet of Ministers of Ukraine on the Encouragement and Mutual Protection of Investments (1998); UNCITRAL Arbitration Rules (1976)
Issues in play: Whether the Russia-Ukraine BIT applied to Crimea after Russia's annexation; whether investments made before the annexation were protected.
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