Ratification of Arbitration-Related Conventions by CIS States: Global and Regional Framework

cis_flags1Trying to create a favourable investment climate, all CIS states have adopted investment protection laws which provide certain privileges to foreign investors. However, when it comes to ratification of international treaties in which states reflect consent to international arbitration of investment disputes, the situation is more nuanced.

All CIS countries are parties to the basic international treaties in the area of foreign investments, such as the Convention Establishing the Multilateral Investment Guarantee Agency (MIGA), which gives investors the opportunities to insure against non-commercial risks in the state with a developing economy, and the Washington Convention on the Settlement of Investment Disputes (ICSID) (except Russia, Kyrgyzstan, and Tajikistan).

The Energy Charter Treaty (ECT) is also signed and ratified by the majority of the CIS countries, except Belarus and Russia. Belarus has signed but not ratified the ECT which means that it applies provisionally. As explained in some detail below, Russia signed the ECT in 1994 which provisionally applies pending ratification, which never took place. In 2009, Russia claims that it formally withdrew from the ECT.

ICSID Convention (Washington Convention 1965)

All CIS states except for Russia, Tajikistan and Kyrgyzstan have also ratified the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the ICSID Convention). The ICSID Convention is a self-contained arbitration system that prohibits the review of arbitral awards by the national courts of any member state. Awards are subject only to review by an international ad hoc committee and thereafter become automatically enforceable. ICSID arbitral awards are final and binding, and all contracting states are required to recognize them.

Foreign investors may nevertheless have access to ICSID arbitration involving the countries that have not ratified the Convention via Additional Facility Rules where it is allowed by investment treaties. Unlike the ICSID awards, awards rendered under the ICSID Additional Facility Rules are subject to the supervision of a national court, and their enforcement is covered by the New York Convention Regime.

It is interesting to note that although Russia, Tajikistan and Kyrgyzstan are not parties to the ICSID Convention, ICSID Additional Facility rules can still be used by them by virtue of regional conventions discussed in more detail below.

Energy Charter Treaty 1994

The Energy Charter Treaty (ECT) has been signed and ratified by the majority of the CIS countries, except Belarus and Russia. Belarus has signed but not ratified the ECT which means that it applies it provisionally. Russia signed the ECT in 1994 but never ratified it. In 2009, during arbitrations involving former shareholders of Yukos oil company, Russia declared that it would no longer seek to ratify the Treaty and formally withdrew from the ECT.

The Treaty aims at providing investment protection in the energy sector and also provides for a specific regime for transit disputes. The ECT operates as an investment protection tool to reduce commercial risks in the energy sector by granting investors non-discriminatory treatment (national treatment and most-favoured national treatment) and granting compensation in the case of expropriation and other losses, as well as enabling free transfer of capital.

The ECT also offers freedom of energy transit, improvement of energy efficiency, and international dispute settlement, including investor-state arbitration and inter-state arbitration. Under Article 26(4) of the ECT, parties may choose ICSID Arbitration, arbitration under the ICSID Additional Facility Rules, ad hoc arbitration under the UNCITRAL Rules, or arbitration under the SCC Rules. The ECT arbitral awards are also final and binding, and each contracting party is obliged to provide for the effective enforcement of such awards.

CIS (Moscow) Convention for the Protection of Investors’ Rights 1997

The Convention on the Protection of Investor’s Rights 1997 remains in force for Armenia, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Tajikistan. The convention contains guarantees to investors similar to those found in many bilateral investment treaties, but applies irrespective of the nationality of the investor. For example, the convention gives protection to investors in case of adverse changes in legislation (Article 5), nationalisation (Article 9), compensation of damages caused to the investor (Article 10) and guarantees on the use of profits (Article 12).

It contains an article which confirms the right of the parties to have recourse to arbitration and international courts, but as the CIS Economic Court explained, this does not establish jurisdiction of any specific court or tribunal. The convention does not contain any provision on the recognition and enforcement of arbitral awards. For the purposes of issuing authoritative interpretations of regional international treaties such as the 1997 Moscow Convention, members of CIS in 1992 established the CIS Economic Court.

Several claims were filed against the Republic of Kyrgyzstan in the Moscow ICAC under the Moscow Convention. The claimants argued that a broadly drafted dispute resolution provision of the Convention entitles potential claimants to bring arbitration proceedings against the states-parties to the Convention in any arbitration court of the investor’s choice. The Kyrgyz Republic initiated annulment proceedings before in Russian courts, and in the meantime applied to the CIS Economic Court seeking clarification of Article 11.In 2014. The CIS Economic Court agreed with Kyrgyzstan that the provisions of the Convention cannot be treated as the consent of the state to refer disputes to international arbitration.

EurAsEc Convention for the Promotion and Mutual Protection of Investments 2008

In 2008, several CIS States signed the Agreement on Promotion and Reciprocal Protection of Investments in the Member States of the Eurasian Economic Community. In addition to similar guarantees provided by the Moscow Convention, it also contains investor-state dispute resolution provisions. In particular, Article 9 provides that investors can resort to arbitration institutions affiliated with national chambers of commerce, UNCITRAL arbitration, ICSID or ICSID additional facility arbitration. Belarus, Kazakhstan, Kyrgyzstan, Russia and Tajikistan are parties to this Agreement. Interestingly, Russia, which is not a party to ICSID Convention, agreed to use ICSID Additional Facility Rules to resolve disputes between investors and contracting states.

Treaty on the Eurasian Economic Union 2014

In 2014, Russia, Belarus and Kazakhstan signed and ratified the Treaty on the Eurasian Economic Union (EEU). Armenia has acceded to the Treaty, and the relevant accession agreement was ratified by the Parliaments of Armenia and Russia. In 2015, Kyrgyzstan also joined the treaty. The Treaty which entered in force in 2015 and replaced 2008 EurAsEc Convention, provides a full suite of investment protections, along with a binding investor-state arbitration mechanism.

The EEU aims to create an environment for a stable development of the Member-States’ economies in order to raise the living standards of their population, as well as to increase the competitiveness of and cooperation between the national economies in the conditions of the global economy. The Treaty confirms the creation of an economic union that provides for free movement of goods, services, capital and labour and pursues coordinated, harmonised and single policy in the sectors determined by the document and international agreements within the Union.

The Treaty also secured the member States’ agreement to pursue a coordinated energy policy and form common energy markets (electric energy, gas, oil and oil products) based on common principles; determines regulatory treatment of the turnover of pharmaceuticals and medical devices; establishes new long-term priorities of transport policy in the territory of the Eurasian Economic Union. Another important novelty of the EEU Treaty is a possibility to apply national treatment to the citizens of all the four countries in regards to social security, including health care.

The Treaty contains a protocol similar to those found in many BITs:

6. Procedure for Settlement of Investment Disputes
84. All disputes between a recipient state and an investor of another Member State arising from or in connection with an investment of that investor on the territory of the recipient state, including disputes regarding the size, terms or order of payment of the amounts received as compensation of damages pursuant to paragraph 77 of this Protocol and the compensation provided for in paragraphs 79-81 of this Protocol, or the order of payment and transfer of funds provided for in paragraph 8 of this Protocol, shall be, where possible, resolved through negotiations.

85. If a dispute may not be resolved through negotiations within 6 months from the date of a written notification of any of the parties to the dispute on negotiations, it may be referred to the following, at investor’s option:
1) a court of the recipient state duly competent to consider relevant disputes;
2) international commercial arbitration court at the Chamber of Commerce of any state as may be agreed by the parties to the dispute;
3) ad hoc arbitration court, which, unless the parties to the dispute agree otherwise, shall be established and act in accordance with the Rules of Arbitration of the United Nations Commission on International Trade Law (UNCITRAL);
4) the International Centre for Settlement of Investment Disputes established pursuant to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States of March 18, 1965, in order to resolve the dispute under the provisions of the Convention (provided that it has entered into force for both Member States that are parties to the dispute) or under the Additional Facility Rules of the International Centre for Settlement of Investment Disputes (if the Convention has not entered into force for one or both the Member States that are parties to the dispute).

86. An investor having referred a dispute for settlement to a national court or one of the arbitration courts specified in sub-paragraphs 1 and 2 of paragraph 85 of this Protocol shall not have the right to redirect the dispute to any other court or arbitration. The choice made by an investor with respect to a court or arbitration referred to in paragraph 85 of this Protocol shall be final.

87. Any arbitration decision on a dispute considered pursuant to paragraph 85 of this Protocol shall be final and binding on the parties to the dispute. Each Member State shall ensure enforcement of such decisions in accordance with its legislation.

In other words, this treaty extends common dispute resolution provisions (including ICSID and UNCITRAL options) to investors coming from the Member States of the Eurasian Economic Union.

Ratification of Arbitration-Related Conventions by CIS States

Country New York Convention* Washington Convention** Minsk Convention*** Energy Charter Treaty**** Eurasian Economic Union
Armenia 29 December 1997 16 September 1992 22 November 1994 18 December 1997 4 December 2014
Azerbaijan 29 February 2000 18 September 1992 1996 2 December 1997 N/A
Belarus 15 November 1960 10 July 1992 10 June 1993 not ratified 9 October 2014
Russia 24 August 1960 not ratified 11 November 1994 not ratified 26 September 2014
Ukraine 10 October 1960 7 June 2000 16 March 1995 6 February 1998 N/A
Kazakhstan 20 November 1995 21 September 2000 20 April 1994 18 October 1995  1 October 2014
Kyrgyzstan 18 December 1996 Signed, not ratified 19 January 1996 08 April 1997 20 May 2015
Moldova 18 September 1998 5 May 2011 26 February 1996 10 June 1996 N/A
Tajikistan 14 August 2012 N/A 21 November 1994 17 June 1997  N/A
Turkmenistan N/A 26 September 1992 21 January 1998 10 July 1997 N/A
Uzbekistan 7 February 1996 26 July 1995 21 February 1994 22 December 1995 N/A


* Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958, http://www.uncitral.org/uncitral/en/uncitral_texts/arbitration/NYConvention_status.html (accessed 27 February 2017).

** Convention on the Settlement of Investment Disputes between States and Nationals of Other States, 1966, https://icsid.worldbank.org/en/Documents/icsiddocs/ICSID%20Convention%20English.pdf (accessed 27 February 2017).

*** The Convention on Legal Assistance and Legal Relations in Civil, Family and Criminal Matters, 1993, http://www.cis.minsk.by/page.php?id=614 (accessed 15 March 2017).

**** The 1994 Energy Charter Treaty, The treaty and related documents are available at http://www.energycharter.org/process/energy-charter-treaty-1994/energy-charter-treaty/ (accessed 20 March 2017).

***** Treaty on the Eurasian Economic Union 2014, http://www.un.org/en/ga/sixth/70/docs/treaty_on_eeu.pdf (accessed 20 March 2017).


This table and a longer version of this text first appeared in a chapter written by Yarik Kryvoi and Kaj Hober in the recently published book Law and Practice of International Arbitration in the CIS Region

About the Author:

Professor Yarik Kryvoi, is the founder and co-editor of the CIS Arbitration Forum. He is the Senior Fellow in International Economic Law and Director of the Investment Treaty Forum at the British Institute of International and Comparative Law (BIICL). He holds law degrees from Harvard, Moscow and St Petersburg. Before moving to academia, he practiced law with Freshfields Bruckhaus Deringer, Morgan Lewis & Bockius and Baker & McKenzie in England, the United States and Russia. See full profile at kryvoi.net.

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