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Alpha Projektholding has won the investment dispute against Ukraine under ICSID rules

The Tribunal found that Ukraine conducted the expropriation of  Alpha Projektholding’s rights and interests in the 1998 and 1999 Joint Activities Agreements in violation of Article 4 of the the Agreement for the Promotion and Reciprocal Protection of Investments between the Republic of Austria and Ukraine (Compensation for Expropriation) and denied fair and equitable to Claimant’s investments in violation of Article 2 of the UABIT (Protection and Promotion of Investments).

However, the Tribunal ruled that Ukraine had not violated Article 8 of the UABIT (Other Obligations) and the national treatment obligation in Article 3 of the UABIT with respect to claimant’s investments. The recognition of violation of the Ukrainian Foreign Investment Law was declined as well.

Ukraine has been ordered to pay USD 2,979,232 with additional interest accruing from July 1, 2004, at a rate of 9.11 percent compounded annually. As stated in the Award, if payment were made on December 31, 2010, total damages owing as of that date would be USD 5,250,782.

 As the Ukrainian Ministry of Justice stated Ukraine had managed to achieve reduction of the claim. Originally Alpha Projektholding claimed app. USD 11.372 million plus interest to the date of payment and reimbursement for legal fees of EUR 2 million.

The case was brought by Alpha Projektholding GmbH, an Austrian limited liability against Ukraine pursuant to the Agreement for the Promotion and Reciprocal Protection of Investments between the Republic of Austria and Ukraine that provides for dispute resolution by means of arbitration before the International Centre for Settlement of Investment Disputes (“ICSID”). Request for arbitration was filed by Alpha Projektholding on June 5, 2007, the arbitral proceedings lasted more than three years, of which the drafting an award took more than a year.

In our previous posts we announced some holdings in this case. You may download the text of the Award of the ICSID Tribunal in the case Alpha Projektholding GmbH (Claimant) v. Ukraine (Respondent) ICSID Case No. ARB/07/16 here.