Sodexo Pass International SAS v. Hungary
ICSID · Investment (ICSID and treaty) · Hungary · 28 Jan 2019
Why it matters
This annulment decision is significant because it upheld the original award against Hungary's challenge based on the Achmea ruling, confirming that ICSID tribunals can exercise jurisdiction under intra-EU BITs where the applicable law clause does not incorporate EU law. It also clarified the standard for annulment under Article 52 of the ICSID Convention, particularly regarding manifest excess of powers and failure to state reasons.
Summary
The case arises from Hungary's changes to its tax regime for meal vouchers, which Sodexo claimed amounted to indirect expropriation of its investment. The original Tribunal found in favor of Sodexo, awarding €78,362,495 plus interest. Hungary sought annulment under Article 52 of the ICSID Convention, arguing that the Tribunal manifestly exceeded its powers by ignoring the Achmea decision (which held that intra-EU BIT arbitration is incompatible with EU law), seriously departed from a fundamental rule of procedure by failing to reopen proceedings after the Achmea decision, and failed to state reasons for its jurisdictional ruling. The ad hoc Committee rejected all grounds. It held that the Tribunal did not exceed its powers because the BIT's applicable law clause (Article 9(3)) referred only to international law, not EU law, distinguishing it from the Achmea case. The Committee also found no procedural violation, as the Tribunal had considered the Achmea decision and the parties' submissions, and its decision not to reopen proceedings was within its discretion. Finally, the Committee ruled that the Award's reasoning on jurisdiction was sufficient and coherent. The annulment was denied, and costs were allocated as described.
The detail
Parties: Sodexo Pass International SAS v. Hungary
Case number: ICSID Case No. ARB/14/20
Outcome: Hungary's application for annulment of the Award is rejected in its entirety; each party bears its own legal fees; Hungary bears all administrative costs of the annulment proceeding.
Applicable law: France-Hungary BIT (1986), ICSID Convention, international law
Issues in play: The case involved a conflict between EU law (specifically the Achmea decision on intra-EU BITs) and the BIT's arbitration clause. The Tribunal found that EU law did not apply because the BIT's applicable law clause referred only to international law, not EU or Hungarian law.
Read the full decision at italaw ↗
Locus Standi links to the source decision and publishes its own plain-language summary. It does not reproduce the text of the award.