Originally from International Arbitration Court Decisions - 3rd Edition

DECISIONS OF THE SVEA COURT OF APPEAL, STOCKHOLM RENDERED IN 2002 IN CASE Ö 7192-01 AND THE MARITIME AND COMMERCIAL COURT, COPENHAGEN RENDERED IN 2003 IN CASE S-22-01

The “SwemBalt” case

Invest dispute. Enforcement of an award rendered under an investment agreement between Latvia and Sweden before Swedish courts and challenge of the same award before Danish courts.

Summary
The dispute that was the subject of arbitration proceedings concerned a Swedish company, SwemBalt’s claim for compensation for the loss of a vessel, SJFW/SwedeBalt, that was registered in Sweden and leased to SwemBalt’s Latvian subsidiary, Swede Balt SIA. The vessel was positioned in the Port of Riga Latvia in April 1993, allegedly with permission from the relevant Latvian authorities. The vessel was to serve as an exhibition area and a conference centre. On 24 March 1994, Swede Balt established a contract of several years’ duration with the Kurzeme Region of Riga regarding the lease of a berth and an area of land. On 28 March 1994, a representative of the Port of Riga removed the vessel. No representatives of the owner were present. The vessel was towed to a berth two nautical miles from the leased berth. Numerous objections were made on the part of the owner and other parties. On 18 April 1994, Riga’s mayor informed SwemBalt that the lease, in accordance with a new Law with retroactive effect, had become invalid. In 1994 and 1995, there were numerous discussions, etc. between the Swedish embassy in Riga and various Latvian authorities, but these did not achieve anything.

On 3 May 1996, the Latvian Maritime Authority announced that the vessel should be sold at a public auction. The vessel was designated a wreck, and the Maritime Authority had decided that the vessel, owing to its being positioned in the place to where it was towed from the Port of Riga, constituted a danger to maritime traffic. In spite of objections from the Swedish side, the vessel was sold at auction in July 1996 for scrap value. The vessel brought in approximately USD 150 000.

On 11 September 1996, SwemBalt’s solicitor issued a Notice of Arbitration. The claim in the case amounted to USD 5 038 636.