Stans Energy Corp. and Kutisay Mining LLC v. Kyrgyz Republic (II)
PCA · Investment (ICSID and treaty) · Kyrgyz Republic · 20 Aug 2019
Why it matters
This award is significant for its detailed analysis of the scope of protection under the Kyrgyz Investment Law, including the applicability of international law standards. It also addresses the legality requirement for investments, clarifying that the burden of proof lies with the respondent to show corruption or illegality. The case underscores the importance of procedural fairness and legitimate expectations in investment arbitration.
Summary
Stans Energy Corp. and its subsidiary Kutisay Mining LLC brought an arbitration against the Kyrgyz Republic under the 2003 Investment Law and UNCITRAL Rules, claiming that the Republic unlawfully expropriated their mining licenses for rare earth elements. The Tribunal had to decide whether it had jurisdiction, whether the claimants' investments were protected, and whether the Republic's actions breached the law. The Republic argued that the licenses were obtained through corruption and in violation of Kyrgyz law, and that the claimants lacked standing. The Tribunal found that it had jurisdiction, that the claimants held qualifying investments, and that the Republic had expropriated the investments without compensation and failed to accord fair and equitable treatment. The Tribunal rejected the Republic's corruption and illegality defenses, finding insufficient evidence. It awarded damages based on the claimants' sunk costs, plus interest, and allocated costs two-thirds against the Republic. The award highlights the application of domestic investment law and the treatment of investor protections.
The detail
Parties: Stans Energy Corp. and Kutisay Mining LLC v. Kyrgyz Republic (II)
Case number: PCA Case No. 2015-32
Outcome: The Tribunal found that the Kyrgyz Republic breached its obligations under the 2003 Investment Law and awarded damages of US$ 15,027,081.89 plus pre-award interest at 5% compounded annually from 16 October 2014, and ordered the Respondent to pay two-thirds of the arbitration costs and legal costs.
Quantum: US$ 15,027,081.89
Applicable law: Kyrgyz Republic Law on Investments in the Kyrgyz Republic of 27 March 2003; UNCITRAL Arbitration Rules 1976
Issues in play: The case involved the interpretation of the 2003 Investment Law, specifically whether it incorporated international law standards such as fair and equitable treatment and expropriation protections, and whether the claimants' investments were obtained in compliance with Kyrgyz law, including anti-corruption and tender requirements.
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.