Armenia Prevails in an Investment Arbitration

It is reported that in TS Investment Corp v. Republic of Armenia, LCIA tribunal found in favor of the Respondent rejecting investor’s claims. TS Investment Corp asserted claims based on breach of a contract between the parties as well as US-Armenia BIT.

The arbitration centered around TS’s investment into a tire plant in Yerevan, Armenia, which TS Investment purchased in 2002. Interfax reported in 2008 that TS Investment accused Armenia of impeding the implementation of its investment program, which would have seen around USD 12 million invested into the plant. Armenia also filed counter-claims which were rejected by the tribunal.

TS Investment Corp v Republic of Armenia appears to be the first investment arbitration against Armenia. With its completion it joins a “club” of CIS states that have gone though at least one investment arbitration (which includes Azerbaijan, Armenia, Kazakhstan, Kyrgyzstan, Moldova, Tajikistan, Turkmenistan, Russian Federation and Ukraine). The only country missing from this list to date is Belarus.

Previous two years have seen a rise in the number of cases commenced and awards issued in the cases involving CIS states. Earlier this year Ukraine prevailed in a dispute with German investor concerning its investment related to an oil refinery (GEA Group Aktiengesellschaft v. Ukraine), but had awards rendered against it in two other arbitrations (Charles Lemire v. Ukraine (investment in radio station) and Remington Worldwide v. Ukraine (energy sector investment)).

Earlier this year Russian investor was partly successful in his claim against Mongolia relating to an investment in gold mining (Paushok v Mongolia). This is yet another an example of a growing trend of CIS investors resorting to investment arbitration to resolve disputes with host governments.

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Recently media reported that MTS, a leading Russian cellular opeator, commenced ICSID proceedings against Turkmenistan in a dispute relating to suspension of cellular license of an MTS subsidiary in Turkmenistan. Elsewhere, JSC Tatneft, a Russian oil company, is prusuing proceedings against Ukraine over its investment in an oil refinery and Alscom, a Moldovan oil and gas group, brought proceedings against Kazakhstan over alleged expropriation of two oil fields.

CIS Arbitration

About the Author:

Sergey Usoskin is an advocate (member of the Russian bar) and a senior associate at Ivanyan&Partners. He has experience advising clients on and representing them in commercial and investment arbitration matters as well as before the Russian court (including the Supreme Commercial Court). He is a graduate of St Petersburg State University, Faculty of Law and University College London Faculty of Laws.

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