Rasia FZE and Joseph K. Borkowski v. Republic of Armenia
ICSID · Investment (ICSID and treaty) · Armenia · 20 Jan 2023
Why it matters
This case illustrates the interplay between contract claims under state concession agreements and treaty claims under a BIT, particularly regarding time bars and the scope of umbrella clauses. The tribunal's analysis of the objective definition of 'investment' under ICSID and its rejection of expropriation claims where no property rights were taken are notable. The decision also addresses causation and damages in the absence of proven expenditure.
Summary
Rasia FZE, a UAE company, and its US shareholder Joseph Borkowski brought an ICSID arbitration against Armenia under two 2012 concession agreements for a high-speed road and a railway in southern Armenia, and under the US-Armenia BIT. The concessions granted Rasia exclusive rights to develop, finance, and operate these projects. Rasia engaged China Communications Construction Company (CCCC) to conduct feasibility studies, but the projects stalled due to disagreements over corridor alignment, financing, and Armenia's parallel discussions with other entities. The claimants alleged that Armenia breached the concessions by failing to cooperate, granting rights to third parties, and ultimately causing the projects to fail. Mr. Borkowski also claimed breaches of the BIT's fair and equitable treatment, arbitrary measures, and expropriation provisions. The tribunal first rejected Armenia's objection that there was no qualifying investment, finding that Rasia's contributions (including the concession rights and feasibility studies) met the objective criteria. However, it held that Rasia's contract claims were time-barred under Armenian law's three-year statute of limitations, as the claims accrued by mid-2015 at the latest and Rasia only initiated arbitration in 2018. Mr. Borkowski's umbrella clause claim was also time-barred and, in any event, he lacked standing to enforce obligations owed to Rasia. On the merits of the BIT claims, the tribunal found no breach of fair and equitable treatment: Armenia's actions were not arbitrary or unreasonable, and it did not expropriate any property rights because the concessions were never terminated and the feasibility studies remained Rasia's property. The tribunal also noted that even if breaches had been proven, the claimants failed to show causation or damages, as they had not expended any funds on the projects. Consequently, all claims were dismissed, and the claimants were ordered to pay a substantial portion of Armenia's legal costs.
The detail
Parties: Rasia FZE and Joseph K. Borkowski v. Republic of Armenia
Case number: ICSID Case No. ARB/18/28
Outcome: All claims dismissed. Claimants ordered to pay Respondent US$2,783,250.09 in costs.
Applicable law: ICSID Convention; US-Armenia BIT (1992); 2012 Railway and Road Concession Agreements; Armenian law (statute of limitations)
Issues in play: The tribunal considered whether Rasia's contract claims were time-barred under Armenian law, and whether Mr. Borkowski could assert umbrella clause claims under the BIT for obligations owed to Rasia. Also at issue was whether the concessions constituted an 'investment' under the ICSID Convention.
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