Stans Energy Corp. and Kutisay Mining LLC v. Kyrgyz Republic (I), MCCI Case No. A-2013/29
Moscow Chamber of Commerce and Industry (MCCI) · Investment (ICSID and treaty) · Kyrgyz Republic · 30 Jun 2014
Why it matters
This case is a rare example of an investment treaty arbitration conducted under the Moscow Chamber of Commerce and Industry, applying the 1997 CIS Convention for the Protection of Investor's Rights. It demonstrates that regional arbitration institutions can handle complex investor-state disputes and award substantial damages for unlawful expropriation, even when the respondent state fails to participate. The award also illustrates the application of the UN International Law Commission's Articles on State Responsibility in an investment context.
Summary
Stans Energy Corp., a Canadian company, and its Kyrgyz subsidiary Kutisay Mining LLC invested in the Kutessay II rare-earth deposit in Kyrgyzstan. They acquired a license through a series of transactions in 2009-2010, including a public auction of shares. In 2012, the Kyrgyz Parliament passed a resolution calling for cancellation of the license, leading to a series of adverse actions by state agencies: refusal to consider work programs, refusal to conduct ecological expert examination, refusal to re-execute the license agreement, and a court action by the General Prosecutor's Office to invalidate the original license grant. The Inter-district Court of Bishkek imposed interim measures barring Kutisay Mining from using the license, and later declared the original negotiations invalid. The claimants initiated arbitration at the Moscow Chamber of Commerce and Industry under the 1997 Convention for the Protection of Investor's Rights, claiming unlawful expropriation and violation of fair treatment. The Kyrgyz Republic did not participate in the proceedings. The tribunal found that the state's actions constituted unlawful expropriation and violated the fair treatment standard. It awarded compensation based on the market value of the license (USD 107,781,000) plus direct costs incurred (USD 10,072,000, minus USD 114,059.70 in charitable costs), totaling USD 117,738,940.30. The tribunal also awarded arbitration costs and legal fees but dismissed the claim for compound interest. The award was rendered on June 30, 2014.
The detail
Parties: Stans Energy Corp. and Kutisay Mining LLC v. Kyrgyz Republic (I), MCCI Case No. A-2013/29
Case number: italaw/cases/2284
Outcome: The tribunal awarded Claimants USD 117,738,940.30 in damages, plus USD 158,975.24 in arbitration costs and USD 308,142.50 in legal costs, dismissing the claim for compound interest.
Quantum: 117,738,940.30 USD
Applicable law: Convention for the Protection of Investor's Rights (1997), Law of the Kyrgyz Republic 'On Investments', MCCI Arbitration Rules
Issues in play: The dispute involved the expropriation of investments and the fair treatment standard under the Convention for the Protection of Investor's Rights, with the tribunal applying the Convention and Kyrgyz investment law to determine state responsibility.
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.