Procedural Posture

This document is a Decision on Preliminary Objections issued by an ICSID Tribunal in an arbitration between JCDecaux SA (Claimant) and the Czech Republic (Respondent). The dispute was brought under the 1990 France-Czech Republic Bilateral Investment Treaty (BIT) and the ICSID Convention. The Respondent bifurcated the proceedings to raise preliminary objections to the Tribunal's jurisdiction, primarily relying on the intra-EU nature of the dispute following the Court of Justice of the European Union (CJEU) decision in Achmea.

Principal Legal Issues and Parties' Positions

The core issue was whether the arbitration agreement in Article 10(2) of the BIT was rendered invalid by EU law and the subsequent Agreement for the Termination of Bilateral Investment Treaties between the Member States of the European Union (Termination Agreement). The Respondent argued that the Termination Agreement applied retroactively, invalidating the BIT's arbitration clause ex tunc. Furthermore, the Respondent contended that under Article 30 of the Vienna Convention on the Law of Treaties (VCLT), the EU Treaties superseded the BIT due to incompatibility. The Respondent also invoked principles of comity and the Tribunal's duty to render an enforceable award.

The Claimant maintained that it had perfected the arbitration agreement in August 2020, prior to the Termination Agreement entering into force. The Claimant argued that its rights under the BIT were direct, not derivative of its home State, and that EU law does not automatically vitiate consent to ICSID arbitration under international law.

Tribunal's Analysis and Findings

The Tribunal dismissed the Respondent's jurisdictional objections. It held that while the Achmea principle is binding within the EU's constitutional regime, it does not prevail over general international law, which the Tribunal is mandated to apply under the BIT and the ICSID Convention. The Tribunal determined that the BIT conferred direct rights upon the investor, which crystallized when the Claimant perfected its consent to arbitrate.

Relying on Article 25(1) of the ICSID Convention, the Tribunal emphasized that once consent is perfected, it cannot be unilaterally withdrawn. Consequently, the Termination Agreement, which entered into force after the arbitration commenced, could not retroactively invalidate the established arbitration agreement. The Tribunal also rejected the application of Article 30 of the VCLT, concluding that the BIT and the EU Treaties do not share the "same subject matter" and operate within distinct legal regimes.

Finally, the Tribunal dismissed the Respondent's arguments regarding bad faith, finding that the Claimant legitimately exercised its rights under the BIT. The Tribunal also declined to abdicate jurisdiction based on comity to the CJEU or speculative concerns regarding the future enforceability of the award within the European Union.

Operative Directions

The Tribunal formally dismissed the Respondent's preliminary objections and affirmed its jurisdiction to determine the Claimant's substantive claims for breach of the BIT. The decision on costs regarding the jurisdictional phase was reserved for a further order.

Procedural Posture and Background

This document is an Award rendered by an ICSID Tribunal in a dispute between JCDecaux SE (Claimant) and the Czech Republic (Respondent) under the France-Czech Republic Bilateral Investment Treaty (BIT) and the ICSID Convention. The dispute concerns the alleged expropriation and impairment of the Claimant's indirect investment in Rencar, a Czech advertising agency. The Claimant acquired a controlling stake in Rencar, whose primary asset was a long-term lease contract (the Rencar Contract) with the Prague public transport company, Dopravní podnik hl. m. Prahy (DPP). The Claimant alleged that the Respondent breached the BIT when DPP wrongfully terminated the Rencar Contract and subsequently reallocated the advertising spaces to competitors through public tenders.

Jurisdictional Objections

The Respondent raised several jurisdictional objections. First, it argued that the Rencar Contract was invalid under Czech law and thus could not constitute a protected investment. The Tribunal rejected this, holding that the Claimant's primary investment was its indirect shareholding in Rencar, which was validly acquired, and that the validity of the underlying contractual assets was a matter for the merits. Second, the Respondent contended that the investment violated Czech public procurement law and international public policy. The Tribunal dismissed these objections, finding that the initial acquisition of shares was lawful and that alleged subsequent procurement violations regarding contract amendments did not deprive the Tribunal of jurisdiction. The Tribunal also rejected the Respondent's allegations of fraudulent practice, noting the lack of sufficient evidence to establish fraud or corruption that would vitiate jurisdiction. Finally, the Tribunal dismissed the objection that the Claimant lacked standing as an investor, confirming the continuity of its indirect shareholding.

Attribution and Merits

On the merits, the central issue was whether DPP's conduct in terminating the Rencar Contract was attributable to the Czech Republic under Articles 5 or 8 of the ILC Articles on State Responsibility. The Claimant argued that DPP exercised governmental authority and acted under the instruction, direction, or control of the City of Prague. The Tribunal found that DPP's provision of mass transportation and management of advertising space were commercial activities, not exercises of governmental authority under Article 5. Under Article 8, while acknowledging the City's ownership and influence over DPP, the Tribunal concluded that DPP's Board of Directors acted within its ordinary commercial discretion when terminating the contract. The Tribunal found insufficient evidence that the City of Prague or political figures instructed or controlled the specific decision to terminate the Rencar Contract.

Decision and Costs

Having found that DPP's conduct was not attributable to the Respondent, the Tribunal dismissed the Claimant's claims in their entirety. In allocating costs, the Tribunal noted that while the Respondent prevailed on the merits, the Claimant had successfully defeated numerous complex jurisdictional objections. Consequently, the Tribunal ordered the Claimant to bear 75% of the Respondent's legal costs for the non-bifurcated phase and 75% of the arbitration costs, resulting in an order for the Claimant to pay EUR 1,038,258.03, CZK 2,211,238.94, and USD 284,447.41, plus compound interest.