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Case Overview
In Garsu Pasaulis v. Kyrgyzstan, Lithuanian security printing corporation UAB Garsu Pasaulis (later renamed Satoris UAB) initiated arbitration against the Kyrgyz Republic under the 1976 UNCITRAL Arbitration Rules, administered by the Permanent Court of Arbitration (PCA Case No. 2020-59), invoking the 2008 Kyrgyzstan-Lithuania Bilateral Investment Treaty. The dispute arose out of the Kyrgyz Republic’s cancellation of a 2018 public procurement tender for the manufacturing of blank biometric e-passports and supporting IT infrastructure, which Claimant had won, and the State’s subsequent refusal to execute the procurement contract amid criminal corruption probes. In its Final Award rendered on 8 April 2024, the Arbitral Tribunal, seated in Stockholm and comprising Kaj Hobér (Presiding Arbitrator), Ian Laird, and Nina Vilkova, upheld jurisdiction, dismissed Respondent's corruption defense, and found that Kyrgyzstan breached the fair and equitable treatment and indirect expropriation standards under Articles 3 and 4 of the BIT, awarding Claimant EUR 1,257,910 in damages plus interest and costs. On 19 December 2025, the Svea Court of Appeal in Stockholm dismissed Kyrgyzstan's setting-aside application in full, upholding the arbitral award.
Procedural History
Prior to the international arbitration, following protests against the tender outcome, on 9 April 2019 the Interdistrict Court of Bishkek (Judge N.Kh. Bekbaeva) granted an interim measure application filed by competing tenderer Mühlbauer ID Services GmbH, enjoining the State Registration Service and Garsu Pasaulis from executing the e-passports procurement contract pending the adjudication of Mühlbauer's administrative challenge. Claimant commenced the arbitration via Notice of Arbitration on 10 February 2020. The Tribunal was constituted on 10 November 2020. Stockholm served as the legal seat and English as the procedural language. Following Claimant's Statement of Claim submitted on 31 August 2021, Respondent submitted its Statement of Defense on 11 March 2022. Following the exchange of written pleadings, the Tribunal issued Procedural Order No. 3 on 30 June 2022 resolving the parties' contested requests for document production, guided by the 1976 UNCITRAL Rules and the 2020 IBA Rules on the Taking of Evidence in International Arbitration. Claimant submitted its Statement of Reply on 31 October 2022, and Respondent submitted its Rejoinder on 18 February 2023. Following the substitution of Joel Dahlquist by Tim Robbins as Tribunal Secretary, an evidentiary hearing took place in Stockholm from 12 to 15 June 2023. Proceedings closed on 8 March 2024, and the Final Award was issued on 8 April 2024. Following an unopposed application by Respondent under Article 36 of the UNCITRAL Rules and Section 32 of the Swedish Arbitration Act, the Tribunal issued an Addendum to Award on 28 May 2024 rectifying clerical and typographical errors. Kyrgyzstan subsequently initiated challenge proceedings before the Svea Court of Appeal (Case No. T 10588-24) seeking to set aside the Award pursuant to Section 34 of the Swedish Arbitration Act, arguing lack of arbitral jurisdiction. In an interlocutory decision rendered on 29 November 2024 (announced 9 December 2024), the Svea Court of Appeal disqualified Claimant's Lithuanian counsel Rimantas Daujotas and Denis Parchajev from acting as counsel of record due to lack of Swedish language proficiency under Chapter 12, Section 2 of the Swedish Code of Judicial Procedure, and dismissed Claimant's application for security for legal costs against Kyrgyzstan pursuant to the 1954 Hague Convention on Civil Procedure. On 19 December 2025, the Svea Court of Appeal rendered its final judgment dismissing Kyrgyzstan's action and ordering it to pay EUR 616,205.20 in legal and litigation costs, denying leave to appeal to the Supreme Court.
Key Issues and Positions
Jurisdiction
Respondent raised two jurisdictional objections in the arbitration. First, it argued that Claimant’s winning of the 2018 Tender did not constitute a protected investment under Article 1(1) of the BIT, characterizing it as mere pre-investment activity carrying procedural rather than substantive economic rights. Second, Respondent contended that Claimant’s claims were inadmissible because the tender victory was procured through corruption. In the setting-aside proceedings, Kyrgyzstan maintained that winning the tender did not qualify as an investment under Article 1(1)(f) of the BIT or international law, lacked economic value under Kyrgyz law, and that any rights had lapsed or been annulled by Kyrgyz courts. Claimant maintained that winning the tender conferred a binding, exclusive property right to execute the contract, qualifying as an economic right under Article 1(1)(f) of the BIT and as an asset under Kyrgyz law. It also relied on its local subsidiary, Garsu Pasaulis LLC, and rejected all corruption allegations as unproven.
Merits
Claimant alleged that the State's arbitrary launch of a GKNB criminal investigation, smear campaigns, and refusal to conclude the contract violated the Fair and Equitable Treatment (FET) standard and constituted indirect expropriation under Article 4. Respondent replied that its actions were lawful regulatory and prosecutorial exercises.
Quantum
In its Statement of Claim, Claimant claimed total damages of EUR 17,436,000, comprising EUR 2,327,000 for losses arising from the expropriation of the e-passports contract, EUR 5,649,000 for lost profits from third-party contracts cancelled due to the scandal, and EUR 9,460,000 for destruction of its international business reputation, alongside compound interest and an order for a public retraction.
Tribunal/Court Reasoning and Holdings
Jurisdiction
The Tribunal dismissed Respondent’s jurisdictional objections, holding that Article 1(1)(f) encompasses "any right to engage in an economic activity under contract", which included Claimant’s acquired right to execute the contract. The Tribunal also confirmed that Garsu Pasaulis LLC was a protected investment and dismissed all corruption allegations for failure of proof.
Merits
The Tribunal found that the abrupt initiation of the GKNB criminal investigation and resulting refusal to execute the contract frustrated Claimant’s legitimate expectations and subjected it to arbitrary and discriminatory treatment in breach of Article 3(1) of the BIT, also constituting an indirect expropriation under Article 4 of the BIT.
Quantum/Damages
Adopting 22 February 2019 as the valuation date, the Tribunal calculated net present lost profits from the e-passports contract at EUR 1,257,910.
Costs
The Tribunal apportioned arbitration costs equally, directed Respondent to reimburse EUR 256,458.68 in advances, and awarded Claimant EUR 985,006.33 in legal costs.
Annulment/Set-Aside
In its interlocutory decision of 29 November 2024, the Svea Court of Appeal ruled that foreign sovereign States are exempt from posting security for court costs under Section 5 of the Swedish Security Act and Article 17 of the 1954 Hague Convention, given reciprocal enforcement obligations under Article 18. In its final judgment, the Svea Court of Appeal conducted an independent de novo review of arbitral jurisdiction. Applying Articles 31 and 32 of the Vienna Convention on the Law of Treaties, the court held that the relevant date for assessing jurisdiction was the date of the alleged treaty breach (22 February 2019). The court determined that Claimant's exclusive statutory right to execute the public procurement contract, backed by court remedies and a EUR 250,000 tender bank guarantee placing capital at risk, constituted a protected investment with economic value under Article 1(1) of the BIT and Kyrgyz law. Subsequent domestic court rulings and the lapse of the tender after 22 February 2019 pertained to the substantive merits rather than jurisdiction.
Disposition / Relief
The Arbitral Tribunal ordered Kyrgyzstan to pay Claimant EUR 1,257,910 in damages plus interest, EUR 985,006.33 in legal fees, and EUR 256,458.68 in arbitration costs. In its judgment of 19 December 2025, the Svea Court of Appeal dismissed Kyrgyzstan's set-aside action and ordered Kyrgyzstan to reimburse Satoris UAB EUR 616,205.20 in litigation costs with statutory interest.
