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Stockholm Arbitration Report (SAR) - (Individual Back Volumes)
Stockholm Arbitration Report (SAR) - (Individual Back Issue)
Preview Page SAR 2004 - 2
Subject-Matters:
(1) Jurisdiction under a Bilateral Investment Treaty.
(2) Definition of investment.
(3) Definition of expropriation and the duty to compensate for
expropriation.
(4) Failure of Respondent to appear (procedural default).
(5) State responsibility for actions of municipal authorities
(agencies/subdivisions).
(6) Determining the rate of interest on amounts awarded.
(7) Whether the losing party shall be ordered to pay the costs of the
arbitration.
Findings:
(1) The Tribunal found that it had jurisdiction under the Sweden-
Latvia Bilateral Investment Treaty, because:
(a) a dispute exists between the Swedish claimant and Latvia;
(b) SwemBalt is an investor in the sense of Article 1 (3) (b) of the
BIT, as a legal person having its seat in Sweden.
(2) There is no basis for doubt about SwemBalt’s ownership of the
ship that is the subject of the dispute, which constitutes an
investment under the treaty, and SwemBalt showed that, in all
likelihood, it complied with Latvian law. Latvia failed to
demonstrate that the investment was not made in accordance with
Latvian law; and, in any event, Latvia’s actions were out of
proportion with any non-compliance that may have existed.
(3) By taking SwemBalt’s ship, preventing SwemBalt from using it, and
by auctioning it without any compensation to SwemBalt, Latvia
breached its obligations under the BIT and general international
law.
While the BIT contains no provision directly requiring Latvia to
compensate SwemBalt for its expropriated investment, such right
can be found in the condition of “prompt, adequate and effective
compensation” required for expropriation to be legal under the
BIT. In addition, the right to compensation for breaches of
