Staur Eiendom AS, EBO Invest AS and Rox Holding AS v. Republic of Latvia
ICSID · Investment (ICSID and treaty) · Latvia · 28 Feb 2020
Why it matters
This case clarifies the limits of state responsibility for acts of state-owned enterprises (SOEs) under investment treaties. The tribunal held that SJSC Airport was not a state organ nor exercising governmental authority, rejecting attribution. It also set a high bar for proving equitable treatment violations, requiring a showing of bad faith or manifest unreasonableness. The award underscores that umbrella clauses do not apply to contracts with non-state entities.
Summary
Three Norwegian investors (Staur, EBO, Rox) owned shares in Rixport, a Latvian company that leased land from SJSC Airport, a state-owned enterprise, to develop a business park near Riga Airport. The leases were amended in 2010 to allow Rixport to build a hotel and office complex. However, disputes arose over planning permissions and alleged interference by the Airport. The investors claimed Latvia breached the Norway-Latvia BIT by failing to provide equitable and reasonable treatment, expropriating their investment, and violating the umbrella clause. The tribunal first upheld jurisdiction, rejecting objections that the claims were contractual or that the Airport's acts were not attributable to Latvia. On the merits, the tribunal found that SJSC Airport was not a state organ under ILC Article 4 because it was a separate legal entity, nor did it exercise governmental authority under Article 5. The Airport's actions were commercial, not sovereign. The equitable treatment claim failed because the investors did not prove bad faith or manifest unreasonableness by Latvian authorities. The expropriation claim failed because there was no direct taking and the alleged indirect expropriation was not sufficiently severe. The umbrella clause claim failed because the Airport was not a state organ. The tribunal dismissed all claims and ordered the investors to pay most of Latvia's costs.
The detail
Parties: Staur Eiendom AS, EBO Invest AS and Rox Holding AS v. Republic of Latvia
Case number: ICSID Case No. ARB/16/38
Outcome: All claims dismissed; Claimants ordered to pay Respondent EUR 2,612,937.42 and USD 329,497.21 in costs plus interest.
Quantum: EUR 2,612,937.42 and USD 329,497.21 (costs awarded to Respondent)
Applicable law: Norway-Latvia BIT (1992); ICSID Convention; ILC Articles on State Responsibility
Issues in play: Whether the state-owned airport operator's actions were attributable to Latvia under ILC Articles 4 and 5; whether Latvia breached the BIT's equitable treatment, expropriation, and umbrella clause provisions.
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