State General Reserve Fund of the Sultanate of Oman v. Republic of Bulgaria (
ICSID · Investment (ICSID and treaty) · Bulgaria · 13 Aug 2019
Why it matters
This award is significant for its detailed analysis of cost allocation in investment arbitration when claims are withdrawn. The tribunal clarified that the 'loser pays' principle applies even without a merits determination, and that the timing of withdrawal is less important than the fact of withdrawal. It also addressed the burden on respondent states when claims are abandoned late in proceedings.
Summary
The State General Reserve Fund of the Sultanate of Oman (SGRF) initiated ICSID arbitration against the Republic of Bulgaria under the Oman-Bulgaria BIT, alleging unlawful treatment of its investment. After extensive written submissions and document production, but before the scheduled oral hearing, SGRF withdrew all its claims 'with prejudice' on 10 December 2018. The only remaining dispute was the allocation of costs. The tribunal, by a majority, ordered SGRF to bear all arbitration costs and reimburse Bulgaria's legal fees and expenses, plus interest. The decision was based on the principle that a respondent should not carry the costs of defending abandoned claims, and that the claimant's late withdrawal did not alter this outcome. The tribunal emphasized its discretion under Article 61(2) of the ICSID Convention and applied the 'costs follow the event' principle, noting that no bad faith was found. The award dismissed all claims with prejudice and ordered SGRF to pay Bulgaria's costs as claimed.
The detail
Parties: State General Reserve Fund of the Sultanate of Oman v. Republic of Bulgaria (
Case number: ICSID Case No. ARB/15/43
Outcome: All claims dismissed with prejudice; Claimant ordered to pay Respondent's costs and legal fees.
Applicable law: Treaty between the Sultanate of Oman and the Republic of Bulgaria on the Promotion and Reciprocal Protection of Investments (BIT); ICSID Convention; ICSID Arbitration Rules
Issues in play: The case involved the allocation of costs under Article 61(2) of the ICSID Convention when a claimant withdraws its claims with prejudice before a hearing. The tribunal applied the 'loser pays' principle, finding that the respondent should not bear the costs of defending abandoned claims.
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