ARBITRAL AWARD IN SCC ARBITRATION V (080/2004) RENDERED IN STOCKHOLM IN APRIL 2006“ the Berschader Award under the Luxembourg/Belgium-Russia BIT”

 

Subject Matters:

a) Do the Claimants (two Belgian physical individuals) who own shares in a company incorporated in Belgium, BI, which owns assets in the territory of the Russian Federation qualify as investors within the meaning of the Luxembourg/Belgium-Russia BIT (the Treaty)?

b) Have the Claimants carried out an investment within the meaning of the Treaty?

c) To what extent can the Claimants rely on the most favoured nation (MFN) clause contained in the basic Treaty to import a more favourable dispute settlement mechanism contained in a third party treaty concluded by the Russian Federation to establish the jurisdiction of the Arbitral Tribunal?

 

Findings:

a) The Claimants qualified as investors within the meaning of Article 1.1 of the Treaty.

b) The Claimants did not carry out an investment within the meaning of Article 1.2 of the Treaty: (i) the Claimants’ shares in the Belgian company, BI, did not constitute an investment withinthe meaning of the Treaty; (ii) in the absence of any express protection in the Treaty for indirect investments, the Tribunal found that the types of indirect investments relied upon by the Claimants (i.e., the Contract, the Claimants’ property rights in the Building and the Agreed Debt) did not constitute an investment within the meaning of the Treaty.

c) The MFN argument was dismissed. The MFN clause contained in the basic Treaty could not incorporate by reference a more favourable dispute settlement mechanism contained in a third party Russian treaty on the grounds that (i) the terms of such MFN clause did not clearly and unambiguously so provided and (ii) it could not be clearly inferred that this was the intention of the Contracting Parties.

 

Parties:

Claimant: Mr. Vladimir Berschader and Mr. Moïse Berschader

Respondent: The Russian Federation