SETTLEMENT OF INVESTMENT DISPUTES: BELARUSIAN PERSPECTIVE

Transcription

1 SETTLEMENT OF INVESTMENT DISPUTES: BELARUSIAN PERSPECTIVE Alexey Anischenko Alesia Tsiabus 19 November 2012 Minsk

2 Outline Economic background Legal framework International Local Jurisdiction: possible scenarios Potential complications 2

3 FDI to Belarus Total 2010 FDI flow in Belarus over 5 bln USD (0,11% of total world FDI flow) Key sectors: - Trade and retail; - Transport& logistics; - Telecom; - Energy; - Industry. UK 1% Germany 1% Cyprus 4% USA 1% Others 8% Switzerland 22% FDI flow to Belarus, 2011 Russia 64% Source: Belarus FDI Strategy for

4 FDI from Belarus FDI flow from Belarus, 2012 The Netherlands 9% Ukraine 14% UK 17% Germany 9% Russia 34% Switzerland 5% Others 7% Austria 5% Total 2012 FDI outflow from Belarus over 4,5 bln USD (0,09% oftotalworldfdiflow) Key sectors: - Retail; - Industry; - Transport& logistics. Source: finatica.by 4

5 Why disputes? More than 700 investment contracts over last 4 years Financialcrisis Changinglegislation Investment policy considerations Unilateral termination of investment contracts: by the State by the Investor E3 5

6 Slide 5 E3 agreements? since you called them agreements before Elena;

7 Legal Framework: International agreements ICSID Convention 1965(ratified on 10 July 1992) Energy Charter Treaty 1994(ratification pending) EurAsEC Agreement on trade in services and investments 2011 EurAsEC Convention on promotion and mutual protection of investments in Member States 2008 CIS Convention on protection of investors rights 1997 CIS Agreement on cooperation in the area of investment activities BITs(around40inprocess) Vienna Conventions 1969 and 1986 New York Convention 1958 European Convention on International Arbitration

8 Legal Framework: National legislation Constitution 1994(as amended) Presidential Decree on Investments(No 10, , as amended) Investment Code 2009(as amended) CivilCode2008(asamended) Commercial Procedural Code 1998(as amended) Civil Procedural Code 1999(as amended) Law on Privatization 1993(as amended) Law on International Treaties 2008 Law on International Arbitration Court 1999(as amended) Council of Ministers Regulation on Pre-Trial Settlement of Investment Disputes(No 146, ) 7

9 Jurisdiction Worldwide In more than 450 investment disputes were resolved via arbitration Over 270 cases were heard in ICSID, more than 120 in Ad hoc arbitration under UNCITRAL Rules Source: UNCTAD,

10 Jurisdiction BY: possible fora State courts Institutional arbitration (ICC, SCC,LCIA, IAC ) Ad hoc arbitration ISCID Economic Court of CIS/EurAsEC??? 9

11 Jurisdiction BY: possible scenarios IC BIT/MIT IC + BIT/MIT No IC, no BIT/MIT 10

12 Jurisdiction BY: Investment Contract Art. 46 Investment Code Investment contract shallcontain as mandatoryprovision indication of dispute resolution procedure and body (including international arbitration for foreign investor). BUT: Par. 1.4Edict No 10 In the investment contract as mandatory provisions shall be defined: аforeign state court, arbitration court created on the territory of [a/the?]foreign state canbe designated as dispute resolution body, ifinvestor is a physical or legal person of [a/the?] foreign state andsuch court is designated as competent body for resolution of dispute in the international agreement, concluded by the Republic of Belarus, including on investment protection. 11

13 Jurisdiction BY: BITs/MITs Available options: Other 5% 1. ISCID;and / or 2. International arbitration courts (ICC, SCC,LCIA,);and /or 3. Ad hoc arbitration (often under UNCITRAL Rules); and / or 4. Competent courts ofhost state / any state; and/or 5. Economic Court of CIS/EurAzEC??? State courts 33% UNCITR AL 31% ICSID 31% Jurisdiction BITs/MITs Source: Own analysis 12

14 Jurisdiction BY: BITs 1 option: Ad hoc only (China) ICSID only (Germany, Latvia, the Netherlands, UK) 2 options: Ad hoc or ICSID (Austria, Lithuania) 3 options: state courts, or Ad hoc, or ICSID (Switzerland) 4 options: SCC, or ICC, or ICSID, or host state courts (Cyprus) state/arbitration courts in accordance with legislation of a Contracting Party, or ICSID, or Ad hoc (Ukraine) 13

15 Jurisdiction BY: CIS Conventions Art. 21 CIS Convention 1993 Disputes [of] investors ofthe Parties with state bodies, legal and natural persons are resolved under established procedure in courts at the place of investment or, subject to parties agreement, in the arbitration court. Art. 11 CIS Convention 1997 Disputes on realization of investments under the present Convention are resolved by courts orarbitration courts of states participants of the disputes, by CIS Economic Court and/or other international courts or international arbitration courts. 14

16 Jurisdiction BY: EurAsEC Convention (art. 9) 1. are resolved if possible by means of negotiations. 2. If a dispute can t be resolved by negotiations within 6 monthsupon written notification by either party, it can be referred at investor s choice to: a) host state competent court; b) International arbitration court attached to commercial chamberof any state agreed by the parties; c) Ad hoc arbitration under UNCITRAL Rules if not agreed otherwise; d) ICSID. 15

17 Jurisdiction BY: Local courts Art. 4 Arbitration Law civillegal disputes between any persons, arising out of international tradeand other international economic relations, if at least one of them has place of residence outside Belarus, as well as other disputes of economic character. Art. 39 ComPC disputes with participation of foreign citizens, stateless persons and refugees, caring out entrepreneurial activity. Art. 37 CivPC disputes arising out of civil relationships,if at least one of the parties to the dispute is natural person 16

18 Jurisdiction BY: Pre-Trial Procedure Par. 2 art. 10 CC Before application to the court with a claim on dispute, arising between legal entities and individual entrepreneurs, it is mandatoryto file a letter of claim (written invitation to voluntary settlement, unless otherwise not provided by or agreement). Par. 2 Regulation No 146 Pre-trial settlement of dispute (controversies), related to investment, is conducted upon written proposal of investor submitted to the competent state body BITs/MITs 17

19 Jurisdiction BY: Pre-Trial Procedure Written application by the Investor Consideration of the application by the Ministry of Economy (under BIT/MIT) or other state body -signatory to the IC up to 15 days (maximum 3 months if involvement of other state bodies is necessary) Answer/Reportto the Investor (copy to the Ministry of Economy) 18

20 Potential complications Definition of investment, Investor and investment dispute" Identity/Nationality of the investor Different DRMs under BITs and ICs Preconditions to arbitration (exhaustion of local administrative and/or judicial remedies, negotiations, cooling-off period ) Contractual claims vs Investment claims Forum shopping/electaunavia/ Fork in the road Waiver of state immunity (jurisdiction, enforcement) Enforcement under New York Convention (public policy) Exclusive jurisdiction of state courts (privatization, corporate and real estate disputes) 19

21 Thank You! Alexey Anischenko Partner phone mobile Estonia Pärnu mnt Tallinn phone fax estonia@sorainen.com Latvia Kr. Valdemāra iela 21 LV-1010 Riga phone fax latvia@sorainen.com Lithuania Jogailos 4 LT Vilnius phone fax lithuania@sorainen.com Belarus ul Nemiga Minsk phone fax belarus@sorainen.com